The study reveals that passive funds AUM has grown to Rs 10.2 lakh crore with 17% of total market share. The AUM of active funds stands at Rs 50.9 lakh crore as of June 2024.
The equities take away the majority of the share with 59.75% of total AUM, followed by 26.95% in debt, 8.85% in hybrid and 4.44% in others.
“The rise of AUM in India’s asset management industry reflects the country’s dynamic and rapidly evolving financial landscape. As more investors enter the market, the industry is poised for sustained growth. For asset managers, the challenge will be to innovate and adapt to the changing needs of investors, ensuring that they remain relevant in a competitive market. They need to stay agile, informed, and ready to embrace the opportunities and challenges that lie ahead,” said Prateek Agrawal, MD and CEO, Motilal Oswal Asset Management Company.
“The financial markets are constantly evolving, and staying informed about where the money is flowing is essential for making sound investment choices. The latest “Where the Money Flows” report from June 2024 offers a deep dive into the current trends driving these movements, shedding light across categories attracting most interest from investors,” said Pratik Oswal, Chief of Business Passive Funds, Motilal Oswal Asset Management Company.
According to the study, active debt funds experienced net inflows of approximately Rs 1.63 lakh crore in Q1FY25 — highest across all categories. Overall, the mutual fund industry recorded net inflows of approximately Rs 3.25 lakh crore in the April – June quarter. Active equity led the way with net inflows of about Rs 2.80 lakh crore, followed by Rs 45,000 crore in passive equity. On the passive side, equity claimed the highest share with around 88% of net inflows, while commodities held an around 8% share.At approximately 73% of market share, arbitrage and broad based funds took away the lion’s share of net inflows in June quarter. Broad based funds in both active and passive equities attracted significant net inflows as equity markets continued to rally in the last quarter.Among active equity, thematic funds saw net inflows of Rs 20,000 crore and arbitrage funds saw net inflows of Rs 30,000 crore. In passive equity, factor funds attracted net inflows of Rs 5,000 crore, with the momentum factor alone contributing to nearly half of these flows.
Flexi Cap, Mid Cap, Small Cap, Multi Cap, and Large & Mid Cap funds picked up steam, attracting net inflows of over 7,000 crore each.
Investors also took to bet on Active Thematic funds attracting Rs 20,000 crore net inflows. Infrastructure, manufacturing, business cycle funds and PSU picked up steam, attracting net inflows of more than Rs 2,000 crore each. Passively managed thematic funds of the PSU category saw highest net inflows, considering relatively small AUM.
Liquid and money market funds drove the net inflows (>85%) followed by Overnight funds, in the June quarter. Low duration and ultra short funds saw net inflows greater than Rs 10,000 crore. Generally, investors use debt funds with maturity up to 1 year to park excess cash in the short term leading to high volatility in inward & outward flows. Passively managed liquid funds saw significant net inflows, given their relatively small AUM.
The study highlighted, during the quarter, outflows from the international segment occurred across categories, primarily attributed to the RBI threshold, which led to few restrictions on new investments in such schemes. Actively managed international funds saw net outflows of Rs 1,000 crore, with a relative majority in the broad-based category. Passively managed international funds saw net inflows of Rs 0.5k crore, with a relatively majority in thematic funds.
The study ‘Where the money flows’ aims to present a snapshot, highlighting the dynamic shifts and patterns that have shaped the mutual fund landscape in the past quarter.