Growth in mutual funds (MFS) slows in 2022 as equity market struggles to inch up. Until November, the industry added 5.8 million investors, compared to 6.8 million last year. Assets under management increased by Rs 2.6 trillion, down 63 percent from Rs 6.9 trillion in January-November 2021, industry data showed.
The equity market has remained region-bound this year as foreign investors pulled record sums out of the Indian market. Since December 13, the Nifty50 has gained 7 percent. Most of the growth has occurred in the past two months. In comparison, the Nifty50 is up 24% in 2021.
“The industry continues to grow, albeit at a slower pace this year. Growth in 2021 is underpinned by a strong market rally.”
Such growth cannot continue forever and a return to meaning had to happen,” said G Pradeepkumar, CEO of Union Asset Management Company.
This year’s rise in interest rates could also be a factor, says Amit Bivalkar, founder and director of Sapient Wealth.
He added, “As interest rates rise, disposable incomes decrease and therefore the number of people who can invest decreases.
Fewer equity fund startups also weigh on raising new investors.
According to MF Distributors, the new funding provided by top fund houses will help the industry attract new investors, with aggressive marketing and sales strategies deployed this time.
However, Strategic Investment Plan (SIP) subscriptions and inflows remain strong. 23 million new SIP accounts were launched between January and November, compared to 22 million in the same period last year. The flow through SIPs continues to trend upward. SIP inflows which were in the range of Rs 11,516 crore in January this year have gradually increased to Rs 13,300 crore in November.
At the same time, termination of SIPs also increased. While SIP enrollments are 6 per cent, SIP closures have increased by 30 per cent this year. As a result, the ratio of SIPs registered as fresh SIPs (SIP stoppage or closure ratio) has increased to 51 percent this year, compared to 41 percent last year.
In the year In 2021, the MF industry has hit a strong growth path on the back of a strong market rally. There were other factors, such as increased savings and lack of other high-yielding investment opportunities.