The study reveals that passive funds Assets under management have grown to Rs 10.2 lakh crore with 17% of the total market share. Assets under management of active funds stands at Rs 50.9 lakh crore as of June 2024.
Equities account for the majority of the share at 59.75% of total AUM, followed by debt at 26.95%, hybrids at 8.85% and others at 4.44%.
“The rise in assets under management 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 they remain relevant in a competitive market. They must remain agile, informed and ready to take advantage of the opportunities and challenges ahead,” said Prateek Agrawal, MD & CEO, Motilal Oswal Asset Management Company.
“Financial markets are constantly evolving and staying informed about where money flows is essential to making sound investment decisions. The latest Where the Money Flows report for June 2024 offers an in-depth analysis of the current trends driving these movements and sheds light on the categories that are attracting the most interest from investors,” said Pratik Oswal, Head, Corporate Passive Funds, Motilal Oswal Asset Management Company.
According to the study, active debt funds saw net inflows of about Rs 1.63 lakh crore in Q1FY25, the highest across all categories. Overall, the mutual fund industry saw net inflows of about Rs 3.25 lakh crore in the April-June quarter. Active equities led the way with net inflows of about Rs 2.80 lakh crore, followed by Rs 45,000 crore in passive equities. On the passive side, equities claimed the largest share with about 88% of net inflows, while commodities held a share of about 8%. With about 73% of the market share, arbitrage and broad-based funds took the lion’s share of net inflows in the June quarter. Broad-based funds in active and passive equities attracted significant net inflows as equity markets continued to recover in the last quarter. Among active equities, thematic funds Arbitrage funds saw net inflows of Rs 20,000 crore and passive equity funds saw net inflows of Rs 30,000 crore. In case of passive equity funds, factor funds attracted net inflows of Rs 5,000 crore, with momentum factor alone contributing to almost half of these inflows.
Flexi Cap, Mid Cap, Small Cap, Multi Cap and Large & Mid Cap funds gained momentum and attracted net inflows of over Rs 7,000 crore each.
Investors also bet on active thematic funds, which attracted net inflows of Rs 20,000 crore. Infrastructure, manufacturing, business cycle and PSU funds gained momentum, attracting net inflows of over Rs 2,000 crore each. Passively managed thematic funds in the PSU category recorded the highest net inflows, considering the relatively small AUM.
Liquid and money market funds drove net inflows (>85%), followed by overnight funds, in the June quarter. Low duration and very short-term funds saw net inflows of over Rs 10,000 crore. Typically, investors use debt funds with maturity up to 1 year to park excess cash in the short term, leading to high volatility in inflows and outflows. Passively managed liquid funds saw significant net inflows, given their relatively small AUMs.
The study highlighted that during the quarter, there were capital outflows from the international segment across all categories, mainly attributed to the RBI threshold, leading to few restrictions on fresh investments in such schemes. international funds Passively managed international funds recorded net inflows of Rs 0.5 billion, with a relative majority in thematic funds.
The ‘Where the Money Flows’ study aims to present a snapshot, highlighting the dynamic shifts and patterns that have shaped the mutual fund landscape in the past quarter.
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