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MOSL: FUND FOLIO (January 2018)-Indian Mutual Fund Tracker — Decoding an eventful year of new highs-cyclicals preferred in CY17

FUND FOLIO (January 2018): Indian Mutual Fund Tracker — Decoding an eventful year of new highs; cyclicals preferred in CY17

 Decoding an eventful year of new highs

• CY17 was an eventful year, with several disruptive events causing significant volatility in the markets. However, bucking this volatile trend, mutual funds continued witnessing steady inflows in CY17, largely led by (i) increased investor participation via systematic investment plans (SIPs), (ii) positive impact from demonetization, with a clear shift in investment preference from physical to financial savings (real estate and gold were less preferred) and (iii) strong returns in mid-caps.
• The Indian mutual fund industry’s AUM grew for the 17th straight quarter in 4QCY17 to touch an all-time high of INR22.4t. Average MF AUM rose 32% YoY (INR5.4t) in CY17, primarily driven by inflows in the equities, balanced and income categories. Notably, AUM growth was higher than the rise in market indices – Nifty was up 28.6% YoY in CY17.
• Equity AUM rose for the fourth consecutive year in CY17 to touch a new high of INR7.7t (+64% YoY), led by a rise in market indices (Nifty up 28.6% YoY) and higher equity schemes sales (INR3,431b, +84% YoY). Redemptions rose 45% YoY to INR1,908b, leading to a rise in net inflows from INR549b in CY16 to INR1,523b in CY17.
• MFs recorded highest-ever net inflows from equities of INR1,523b in CY17, higher than cumulative inflows for CY16 (INR549b) and CY15 (INR906b).