Bombay:
Led by a surge in inflows into equity-oriented funds, mutual funds’ assets under management (AUM) soared to a record high of Rs 37.73 lakh crore in 2021, a 22 percent increase over the corresponding period, according to a report. from Crisil .
It further said that the net incremental inflow of Rs 6.70 lakh crore in 2021 is also a record over the previous peak of Rs 4.80 lakh crore in 2017 and Rs 4.5 lakh crore in 2020.
In percentage terms, the AUM rose a whopping 22 percent compared to 17 percent in 2020, the report says, which attributes the record numbers to inflows into equity-focused funds that took the bulk of the year, as opposed to the previous year when there was a net outflow was.
Crisil further said that while net flows over the past two years – when markets were high after the pandemic-induced carnage in the first half of 2020 – were comparable at around Rs 1.81 lakh crore each, the plot lines differed greatly from seeing 2020 saw sharp inflows into debt-oriented funds, and in 2021 equity-oriented funds see most of the inflows cornered.
To be sure, net inflows into debt-oriented funds in 2020 came despite the liquidity crisis, with a staggering Rs 1.94 lakh crore in outflows in March – the highest since September 2018 with an outflow of Rs 2.10 lakh crore after the IL&FS crisis.
On the other hand, open-ended debt-oriented funds saw inflows of Rs 2.01 lakh crore in 2020 even while equity-oriented funds saw net inflows of just Rs 9,100 crore.
Hybrid funds also took a beating with outflows exceeding Rs 53,000 crore. Passive funds, however, continued to cash in, with an increase of Rs 62,000 crore, led by inflows from institutional investors such as the Employees’ Provident Fund.
In contrast, in 2021, investors put more of their money into equity-focused funds, buoyed by strong gains in the underlying equity markets.
While equity funds saw net inflows of Rs 91,000 crore, passive funds saw Rs 1.14 lakh crore enter and hybrid funds Rs 1.02 lakh crore, the latter two being boosted by a wave of new fund offerings, at 41 and 8 funds respectively.