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MOSL: FUND FOLIO (April 2018): Indian Mutual Fund Tracker — Net inflows in equities shrug off volatility to more than double in FY18

FUND FOLIO (April 2018): Indian Mutual Fund Tracker — Net inflows in equities shrug off volatility to more than double in FY18

 

Key observations

• FY18 was an eventful but a highly volatile year for the markets – the last two months particularly showed erratic movements, mostly with a downward bias. Investors had to digest a lot of tough news – both on the global and domestic front – such as global interest rate tightening, potential trade conflict, and domestic political uncertainty after the BJP’s muted show in the recent by-polls.
• However, bucking the volatile trend, domestic MFs’ equity AUM rose for the fifth consecutive year to reach INR7.5t (+38% YoY) in FY18. Notably, AUM had rallied strongly by 45% up to January (FY18YTD) to a high of INR7.9t, before shedding 1.3% in February and 3.5% in March.
• The increase in AUM was led by an upmove in market indices (Nifty: +10% YoY) and higher equity scheme sales (INR4005b: +82% YoY). Redemptions rose 54% YoY to INR2,294b, leading to an increase in net inflows (more than double YoY) from INR704b in FY17 to INR1,711b in FY18.
• Average AUM rose 26% YoY (INR4.7t) in FY18, primarily on account of inflows in the equity, balanced and income categories, which together contributed 88% of total inflows. MF AUM grew (+3% QoQ) for the 18th straight quarter in 4QFY18 to reach an all-time high of INR23.1t.
• Equity AUM, as a percentage of India’s market capitalization, increased 80bp YoY to 5.3% in FY18.