Led by a rise in inflows into equity-oriented funds, assets under management (AUM) of mutual funds rose to a record high of Rs 37.73 lakh crore in 2021, up by 22 per cent from the corresponding period, according to a report by Crisil.
It further said that the net incremental inflow of Rs 6.70 lakh crore in 2021 is also a record over the previous peak of Rs 4.80 lakh crore in 2017, and Rs 4.5 lakh crore in 2020.
In percentage terms, the AUM rose as much as 22 per cent compared to 17 per cent in 2020, says the report which attributes the record numbers to the inflows into equity-oriented funds which hogged the lion’s share in the year, unlike in the previous year when it saw net outflows.
Crisil further said that while net flows in the past two years – when the markets were on a high after the pandemic induced bloodbath in the first half 2020 – were similar at around Rs 1.81 lakh crore each, the plot lines were starkly different with 2020 seeing sharp inflows into debt-oriented funds, and 2021 seeing equity-oriented funds cornering the bulk of inflows.
To be sure, net inflows into debt-oriented funds in 2020 came despite the liquidity crisis, with as much as Rs 1.94 lakh crore of outflows in March – the highest since September 2018 with an outflow of Rs 2.10 lakh crore following the IL&FS crisis.
On the other hand, open-ended debt-oriented funds saw inflows of Rs 2.01 lakh crore in 2020 even as equity-oriented funds saw net inflows of just Rs 9,100 crore.
Hybrid funds also took a beating with over Rs 53,000 crore outflows. However, passive funds continued to garner money, lapping up Rs 62,000 crore, led by inflows from institutional investors like the Employees’ Provident Fund.
In contrast, 2021 saw investors put a larger amount of their money in equity-oriented funds, drawn by the strong gains in the underlying equity markets.
While equity funds got net inflows of Rs 91,000 crore, passive funds saw Rs 1.14 lakh crore coming in and hybrid funds Rs 1.02 lakh crore, with the latter two boosted by a spate of new fund offers, at 41 and 8 funds, respectively.