In the month of August, Indian mutual fund industry touched the all-time high by becoming an industry of Rs. 25.2 lakh crore. The sustained inflow of funds of Rs. 1.75 lakh crore in over a month registered a sharp growth of 9 % and also increased influx towards the liquid schemes.The faith of the investors in the mutual funds, especially the SIPs is quite evident with the sharp increase in the growth of the industry in terms of investors. The new generation of investors is accepting the mutual funds as the potent tool of financial investment. More retail investors are showing an inclination towards the equities and are allocating their funds through SIPs.
What can be the reasons behind this steady growth of the mutual industry?
Experts claim that the reason why mutual fund industry AUM crossed the Rs. 25 lakh crore marks was as a result of the influx of collections through the SIPs that touched a record high too at Rs. 7,654 crore.
The following can be deemed responsible for the steady growth of the mutual fund industry that helped it become a Rs. 25 lakh crore industry:
The positive influx of the retail for 29 consecutive months and an overall rise in the number of folios over the past 51 months.
The Nifty gained a sharp 3.9% owing to the collection of the equity funds.
A reposed faith of the investors in the systematic investment plans (SIPs).
The influx of a strong force of new investors into the SIP route.
Equity mutual funds witnessed an influx of whooping Rs. 8,375 crore; SIPs and New Fund Offers were responsible for the major bulk of the influx.
Over 6 lakh SIP accounts were added in the month of August increasing the number of accounts to 2.39 crore.
Assets under Management from the SIPs saw a sharp rise by adding Rs. 2.32 lakh crore, which comes to a solid 9.2% of the total AUM.
It is expected that the mutual fund industry will meet its targeted Rs. 50 lakh crore before the completion of three years all because of the steady influx from the retail investors.
The rate of interests and higher returns on the bonds attracted new investors.
Investors in high-duration products showed a sharp inclination towards the liquid assets.
What will further increase the pace of the mutual fund industry?
Currently the high price of oil, the low value of rupee, the growth uncertainty in the corporate sector and the high valuation are the primary concerns of the investment market.
Although the steady flow of SIP has considerably slowed down after hitting the peak; a small fall in the oil prices, increase in the FFI flow or even a slight drop in the valuation, will accelerate its growth. A small change in the market factors will draw in more investments and will increase the pace of the mutual fund industry.
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Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Past performance is not an indicator of future returns. Wealth Redefine is a AMFI registered Mutual Fund distributor – ARN - 167127

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