A massive rally in the equity markets since May bringing in heavy inflows into equity ETFs and open-ended debt funds has helped mutual fund AUM grow 17 per cent to top the Rs 31-lakh-crore-mark in 2020, which is 1 percentage point lower than 2019, according to a report.
The industry not only recovered from the massive losses in March due to a sharp erosion in the equity market and outflows from debt funds but also added Rs 4.5 lakh crore in the year to close at Rs 31.02 lakh crore.
A massive rally in the equity markets since May bringing in heavy inflows into equity ETFs and open-ended debt funds has helped mutual fund AUM grow 17 per cent to top the Rs 31-lakh-crore-mark in 2020, which is 1 percentage point lower than 2019, according to a report. During the year, the 44-player industry has added Rs 4.5 lakh crore to the AUM, while in 2019 it grew 18 per cent from Rs 22.86 lakh crore in 2018, when it had grown only 7.5 per cent, as per Crisil data.
In 2017, the industry rallied 32 per cent and added over Rs 5.4 lakh crore in AUM. In the decade ending 2019, it had grown from Rs 8.52 lakh crore to Rs 27.6 lakh crore in 2019, an over three-fold jump. In December, the industry clipped at 3 per cent to take the overall AUM to Rs 31.02 lakh crore mark. “A buoyant run-up in the underlying equity market and firm inflows into open-ended debt funds and equity exchange-traded funds (ETFs) helped take the assets under management (AUM) of the mutual fund industry past the Rs 31-lakh-crore-mark for the first time,” Crisil said.
The industry not only recovered from the massive losses in March due to a sharp erosion in the equity market and outflows from debt funds but also added Rs 4.5 lakh crore in the year to close at Rs 31.02 lakh crore, it added. However, according to the Association of Mutual Funds (Amfi), December saw the sixth straight month of outflows with investors exiting open-ended equity funds, with the large-cap, multi-cap and value/contra schemes bleeding the most.
“Cumulative outflows for these categories stood at Rs 9,058 crore in December,” the report said. On the other hand, dividend yield funds saw firm inflows to the tune of Rs 1,490 crore in the month. Coincidentally, the month also saw the highest inflows for the category since Amfi changed its format in April 2019. Sectoral/thematic schemes got Rs 3,412 crore inflows, which is the highest for the category since April 2019. At the aggregate level, open-ended equity schemes saw net outflows of Rs 10,147 crore in December, only slightly lower than the previous month’s net outflows of Rs 12,917 crore.
Despite this, the open-ended equity fund asset base advanced around 6 per cent on-month to settle at a fresh record high of Rs 9.07 lakh crore, riding on mark-to-market gains as the Sensex and Nifty rallied 8 per cent each in December and 15.8 per cent in the full year, after plunging 35 per cent in March alone. For the full year, the category saw net inflows of Rs 9,100 crore, aided primarily by market gains with the benchmarks rallying 15 per cent each during 2020. Equity ETFs witnessed inflows of Rs 6,832 crore in December, sharply higher than net inflows of Rs 641 crore in November.
Gold ETFs, which track the price of the yellow metal, attracted net inflows of Rs 431 crore in December, reversing the net outflows of Rs 141 crore in November, as investors took advantage of the rising gold prices. For the full year, equity ETFs attracted inflows of over Rs 51,000 crore, while gold ETFs saw net inflows of over Rs 6,600 crore, taking their asset tally to Rs 2.56 lakh crore and Rs 14,000 crore, respectively.
Outflows in hybrid funds grew to Rs 5,932 crore in December, higher than the outflow of Rs 5,249 crore in November. The December net outflows were the highest since July 2020, which saw the category witness net outflows of Rs 7,301 crore. For the full year, hybrid schemes saw net outflows of Rs 53,200 crore, while the category assets declined 11 per cent. The investor count has grown to 8.85 crore in 2020 over 2019. In 2018, the folio grew by more than 1.3 crore.