Indian Mutual Fund Industry 2022 has traveled relatively smoothly despite several central bank repo rate hikes and significant global headwinds amid market turmoil.
The benchmark Nifty index rose 10.87 percent in the year ended December 19, 2022, far better than the tech-heavy Nasdaq’s 28.54 percent decline in the year.
The Reserve Bank of India (RBI) has increased the policy rate five times this year to 6.25 percent. However, equity mutual funds continue to be preferred by investors.
In November this year, the number of share folios increased by 1.10 crores. The largest increase in folios was seen in small-cap funds, which rose by 23.87 lakh folios, data from the Association of Mutual Funds of India (AMFI) shows from January to November 2022.
Strong performance of active stocks
Multi-cap mutual funds, which invest at least 25 percent in large, mid and small-cap stocks by market capitalization, have become the most popular choice for retail investors, with net assets under management (AUM) rising 49.54 percent from January to November, the highest among active stocks. While the sector and thematic mutual funds category saw net AUM increase by just 18.75 per cent, they moved the highest amount in the active stocks category, at Rs 59.19,000.
High income to passive funds
Although passive investing is a popular choice of investment vehicle in the West, retail investors in India are starting to follow the trend, with India’s retail investors posting a sharp increase of 147.88%. in any fund category.
The net flow of these funds stood at 72.62 lakh crores.
Index mutual funds invest their money in an index. As the fund determines the weighting of these funds, the expense ratio of these funds is very low compared to other funds.
Index funds rose from 68 to 137 in 11 months, an increase of 101 percent.
Number of debt mutual funds falling
Total number of debt mutual fund folios decreased by 3.46 lakh. Out of 16 debt mutual funds, the net AUM of 12 debt funds were in the red, while the net AUM of only four debt funds increased. Liquid mutual funds were the most popular choice, seeing an inflow of Rs 31.79 lakh. Short-term debt mutual funds saw an inflow of Rs 48.43 lakh, the highest inflow for mutual funds. Their net AUM decreased by 30.90 percent, followed by corporate bonds and floating mutual funds with a net inflow of Rs 39.80,000 crore and Rs 36.76,000 crore respectively.