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Below the Quote on SIP Contributions Hit New Highs in June: Market Confidence Driven by Positive Economic Indicators By Rishabh Goel, MD, Tailwind Financial Services

The mutual fund industry's growth in June 2024 was marked by record equity inflows, driven by strong market confidence, SIP contributions, and NFOs. Despite challenges in the debt fund segment, overall, AUM continued to rise, reflecting the evolving investment strategies and confidence of investors. Key trends include a continued search for strong narratives in debt funds, high alpha interest in equity sectoral/thematic funds at market peaks, and a growing preference for hybrid funds for diversified asset allocation.

Equity Mutual Funds Surge in June 2024

June 2024 marked a significant milestone for equity mutual funds, with net inflows reaching Rs 40,608 crore, up 17% from Rs 34,697 crore in May 2024. This achievement set a new record for the second consecutive month, underscoring the continued positive trend in equity inflows since March 2021. By the end of June, the total assets under management (AUM) for equity mutual funds had climbed to approximately Rs 27.68 lakh crore, up from Rs 25.39 lakh crore at the end of May.

SIPs and NFOs Fuel Equity Inflows

Systematic Investment Plans (SIPs) played a crucial role in driving these inflows, contributing ?21,262 crore in June, compared to ?20,904 crore in May. This period saw the registration of 55,12,962 new SIPs, bringing the total number of SIP accounts to 8,98,66,962. Additionally, seventeen new fund offerings (NFOs) were launched in June, raising a total of ?15,227 crore. Sectoral and thematic funds were particularly popular, collecting Rs 12,974 crore from these NFOs.

Growth in Mutual Fund Industry AUM

The mutual fund industry’s net AUM for June 2024 reached Rs 61,15,581.92 crore, up from Rs 58,91,160.48 crore in May. This growth was driven by a combination of strong equity inflows and increasing investor confidence. Over the past year, the industry has seen significant expansion, with total AUM rising sharply from Rs 10 lakh crore ten years ago and Rs 51 lakh crore just six months ago.

Debt Funds Experience Outflows

In contrast to the positive equity inflows, debt mutual funds faced significant outflows totaling Rs 1,07,357 crore in June, compared to inflows of Rs 42,295 crore in May. This reversal was primarily due to higher redemptions by corporates to meet advance tax requirements. Liquid funds and overnight funds experienced the most substantial outflows, while money market funds saw inflows of Rs 9,590 crore.

Sectoral and Thematic Funds Lead Equity Scheme Inflows

Sectoral funds led equity scheme inflows in June with Rs 22,351 crore, followed by multi-cap funds at Rs 4,708 crore and flexi-cap schemes at Rs 3,058 crore. Large-cap fund inflows were Rs 970 crore, mid-cap funds saw Rs 2,527 crore, and small-cap funds had Rs 2,263 crore in inflows. The strong performance of sectoral and thematic funds highlighted investor interest in targeted investment strategies.

Trillion Rupee Club Expansion

The Trillion Rupee Club, consisting of fund categories with over Rs 1 trillion in AUM, added a new member in June. Out of 39 open-ended fund categories, 20 had over Rs 1 trillion in AUM, with active equity funds and some debt fund categories leading the pack. Flexi-cap funds had the highest AUM among equity funds, followed closely by sectoral/thematic funds.

Hybrid and Passive Funds

Hybrid fund inflows dropped by 50% to Rs 8,854.74 crore in June from Rs17,990.67 crore in May. Net flows into multi-asset allocation funds were Rs 3,453.12 crore, and arbitrage funds received Rs 3,836.58 crore. Meanwhile, passive funds maintained steady inflows, with net inflows of Rs 14,602 crore driven by Rs 9,134 crore into Index ETFs and Rs 5,072 crore into index funds.

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