Mutual Fund AUM Grows to Rs 67.09 Lakh Crore in September 2024: What’s Driving This 33.7% Surge?

India’s Mutual Fund Industry Sees Massive Growth in September 2024: A Closer Look

 

Mutual Fund AUM Grows to Rs 67.09 Lakh Crore in September 2024: What’s Driving This 33.7% Surge?

India Mutual Fund Industry Sees Historic Growth in September 2024: A Deepest Dive In September 2024, the India Mutual Fund saw historic growth in one month. The AUM of equity-oriented mutual funds grew to a marvelous 33.7%. AUM, or total Assets Under Management, reached an all-time record of Rs 67.09 lakh crore, making the mutual fund landscape as promising as ever. The sizeable growth reflects the confidence of investors in the equity market, which is fueled by positive inflows and an expanding base of retail investors. Let’s dive deeper into what’s driving this growth and why the mutual fund market remains a popular investment avenue.

Mutual Funds AUM Growth: The Big Picture

The mutual fund industry touched a milestone in September 2024; total AUM across various mutual fund categories reached the figure of Rs 67.09 lakh crore, the growth of which marked an increase of 33.7% year-on-year. This brought equity-oriented schemes in clear display, growing significantly in terms of numbers. The fact that macroeconomic challenges have not led to a decline in the inflow into equity mutual funds assumes that investors see potential long-term growth in Indian equity markets.

What Fuels the 33.7% Equity Mutual Fund Success?

But what fuelled this handsome growth in the mutual fund industry was in no small measure robust retail participation. A growing middle class with financial acumen and easy access to the digital platform is leading to increases in mutual fund retail investment at a very steep rate. SIP inflows have been healthy, as with so many investors now turning to SIPs as a disciplined form of investment.

Resilient Equity Markets: Despite global uncertainty, Indian equity markets have held up relatively well on the back of encouraging economic indicators, governmental reforms, and stable corporate earnings. With this positives, more investors are now coming into equity mutual funds, which have considerably driven AUM growth.

Benefit of Diversification: Mutual funds, in particular equity funds, diversify the portfolio for the investor by spreading investments over various sectors and asset classes. In view of the market volatility that is prevalent now, almost all investors feel that mutual fund investments are less volatile as compared to direct stock investments.

Emerging from Traditional Investments: Increased awareness of the inadequacy of more traditional investment avenues such as fixed deposits has led to an increase in demand for mutual funds. Mutual fund investing is highly alluring in terms of greater potential returns- more significant than what one would gain in a low-interest rate environment.

Equity Funds: The Star Performer

According to the Equity mutual funds, majority of the investors have preferred to invest because of the high performance recorded in the equity markets. The nature of these funds is to primarily invest in the stocks of companies. These would mean investors expect higher returns over the long run. In September 2024, the AUM in the equity fund rose by 33.7 percent. This shows a rise in appetite for riskier, yet potentially more rewarding, assets.

Among the categories that attract massive inflows include:

Large-cap Funds: These funds can be said to aggressively invest in big stable companies that have larger market capitalization. It is the relative stability and consistent returns these provide which attract investors.

Mid-cap and small-cap funds have been performing very well on growth opportunities. This fund carries much more risk than large-cap funds, but when the companies are performing well in this category, it has much greater upside.

Sectoral and Thematic Funds: More sector- or theme-specific funds-there are funds focused on technology and pharmaceuticals or banking, for instance-have steady trends owing to the performance of particular sectors in the Indian economy.

SIP Inflows Remain Strong

SIPs have also been key drivers of mutual fund inflows. Through SIPs, contributions, as of September 2024, have been steady and increased in part because of the rising retail investor participation. With SIPs, small amounts are steadily re-invested in mutual funds, thereby reducing the impact of market risks over time.

Numbers favor SIPs.

Regular Contributions Every Month: SIP is the first choice of all investors in recent times because it encourages the automatic building of investment and risk spreading over time. It thereby prevents market timing, which is always a temptation for any investor when he invests in mutual funds.

Growth of SIP through Retail Investors: This is where SIP is highly in demand among retail investors. It’s easy to invest in mutual funds on a long-term basis. It can be done regularly, which otherwise may be very expensive in a short span of time.

Regulatory changes impact

Many of the regulatory steps taken towards the mutual fund industry have been positive and added to the transparency of investing while improving investor protection. Reforms in the policy regulations have made investment in mutual funds more available to investors.

Increased transparency: Recently, SEBI has increased transparency associated with the schemes of the mutual fund to give a better understanding of the portfolio as well as performance of the fund.

Reduction in Expense Ratios: The reduction in expense ratios for the mutual fund schemes has reduced the cost of investing for retail investors. This move encouraged more people to invest in mutual funds.

Categorization of Funds: The categorisation of funds has provided much clarity to investors. Therefore, they know what kind of mutual fund they are investing in and matching it up well with their financial plans.

Challenges to the Mutual Fund Industry

Though growth figures look promising, the mutual fund industry comes across challenges of its own. Some of them are:

Market Volatility: The equity market is fundamentally volatile. In case there is a fall, the mutual fund industry would be indirectly affected. Investors could fret and therefore conserve inflows into equity mutual funds.

Fluctuation in Interest Rates Interest rates have also influenced the debt mutual funds, though it has not surged to the same level of growth as equity funds. Higher interest rates make bonds less attractive and directly influence the performance of debt mutual funds.

The global economic uncertainty arising from geopolitics, global slowdown, or a trade war between the large economies may strike Indian economy and consequently the stock markets, which will hit the mutual fund industry, too.

Road Ahead for Mutual Funds

Despite these challenges, the future prospect for mutual funds in India remains bright and rosy. Increase in base of investors, spreading financial awareness, and pro-investor government reforms will keep the industry growing further.

Digital Adoption: On the investment platform or mobile application, mutual fund investment has become accessible to a much wider group of investors, especially the younger generation, which also feels at ease using digital technology.

Investor Education: Continued efforts toward educating investors about the mutual fund benefits and risks will help sustain growth. Every mutual fund house and financial institution is running an awareness campaign to promote mutual funds as an instrument of wealth creation over long-term periods.

Expansion through Financial Inclusion: The easy access that financial services now receive in many rural and semi-urban areas is going to expand mutual fund savings further, with the government’s push for financial inclusion and further digital banking initiatives.

Conclusion

The Indian mutual fund industry is growing more than ever, thanks to the firm base laid by strong retail participation, robust equity markets, and increasing investor awareness. The total AUM rose up to Rs 67.09 lakh crore till September 2024, thus promising a great future for mutual funds. However, investors must always be wary about market risks and global uncertainties that may deter returns. Always, a diversified portfolio and investment for the long term would be the way to deal with the emerging financial landscape.
Read More At Here

Disclaimer:

All above recommendations are of the market analysts. Neither the author, nor the brokerage firm, nor Stockstoday.in will be responsible for any loss arising out of any such decision taken based upon this information. All users are cautioned to take their own expert advice prior to making any investment decision.

Recent Updates

Web Stories

India’s gig economy:
India’s gig economy:

Market Updates

India’s gig economy: