Mutual fund assets rise to record high in August; thematic funds lead equity inflows

India's total mutual fund assets jumped to an all-time high of Rs 66.7 lakh crore, as of August-end, adding about 16 trillion rupees in 2024.

Inflows into equity mutual funds rose 3 per cent sequentially to Rs 38,239 crore in August, just shy of the record high of Rs 40,608 crore hit in June, according to data from the Association for Mutual Funds in India on Tuesday.

India's benchmark equity indexes have gained 15.5 per cent in 2024, after rising 20 per cent last year, drawing retail investors in droves to invest via funds and directly in the stock market.

Total inflows into equity mutual funds in the first eight months of 2024 jumped nearly three-fold year-on-year to Rs 2.41 lakh crore, the fastest rise on record, with thematic and sectoral funds contributing 45 per cent of the total.

India's equity mutual funds have received inflows aggregating to Rs 6.74 lakh crore since March 2021, powering a stock market rally of 74 per cent since then to record high levels and cushioning volatility in foreign outflows.

The benchmarks, helped by rising equity inflows, gained about 1.1 per cent in August. Investor interest in large-cap funds increased, with inflows into the segment nearly quadrupling sequentially to Rs 2,687 crore, the highest since March 2022. Inflows into small-cap funds rose 52 per cent and mid-caps funds nearly doubled during the month despite concerns over elevated valuations in the segment.

The Nifty mid-cap 100 and small-cap 100 rose 0.9 per cent and 0.5 per cent, respectively, in August, underperforming the benchmarks.

"The robust net inflows into NFOs (new fund offers) points towards their continued appeal among investors," said Himanshu Srivastava, associate director of manager research at Morningstar Investment Research India.

"However, investors should be cautious while selecting funds specially from the sector/thematic category. Such funds offer a very high-risk high return investment proposition and may not fit in the portfolio of every investor," Srivastava added.

Contributions to systematic investment plans (SIPs) touched a record high of 235.47 billion rupees in August, hitting a lifetime high for the 14th straight month.