Last fiscal year, the mutual fund sector in India faced tough times as 342 schemes delivered negative returns to investors in the financial year 2022-23, a significant increase compared to 60 schemes in 2021-22.
According to the Securities and Exchange Board of India's (SEBI) latest annual report, the number of schemes that provided returns of more than 5 percent declined from 898 in 2021-22 to 595 in 2022-23.
The report, however, did not provide a breakdown between debt and equity schemes, nor did it reveal how the different categories of funds performed during the past two financial years.
Dependent on market movements
The data in the annual report suggested that the performance of Indian mutual fund schemes was reflective of the prevailing market mood.
For example, 60 schemes giving negative returns during FY22 came when market benchmarks Sensex and Nifty rose around 17 percent each during the financial year.
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Annual returns for direct plan growth option of schemes, including funds of funds, is considered.
Further, 342 schemes delivered negative returns during FY23 at a time when Sensex and Nifty were negative at -0.48 percent and -1.76 percent, respectively, during the period.
The breakdown of data also showed that 56 schemes delivered more than -10 percent returns during 2022-23, up from 20 in 2021-22.
Further, 286 schemes gave returns between nil and -10 percent during the March 31, 2023, ended one-year period compared with 40 during the preceding one-year period.
On the other hand, just 146 schemes gave more than 10 percent returns in FY23 against 684 in FY22.
Following two years of exceptional performance, the equity markets took a breather in 2022-23, with the benchmark indices Nifty 50 and Sensex inching lower.
A slew of global geo-political and challenging macroeconomic conditions unfolded during the year, which impacted the markets. During the first three-quarters of the fiscal, Indian equity markets exhibited resilience and outshone their global peers. Albeit, the performance of domestic equity markets moderated in the last quarter.
Schemes Launched
As per the SEBI annual report, the year 2022-23 witnessed an almost two-fold increase in new schemes as 361 new schemes were launched compared to 183 in the previous year.
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Of the total, 275 were open-ended schemes and 86 close-ended schemes. Passive schemes, included in ‘Others Schemes’ consisting of Exchange-traded Funds (ETFs), Index funds and Fund of Funds (FoFs) investing in overseas funds, witnessed the highest number of new scheme additions (158) during 2022-23.
In terms of breakdown, 12 hybrid schemes were launched in FY23 against six in FY22.
Growth in asset management
As per SEBI, the Indian asset management ecosystem has undergone a significant transition over the span of the last five years.
“The assets under management (AUM) of the mutual fund (MF) industry grew at a rapid pace since 2018-19. As on March 31, 2023, AUM of the MF industry stood at Rs 39.4 trillion and the number of mutual fund accounts/folios was 14.57 crore, of which the unique number of folios was 3.77 crore,” the regulator said in the report.
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Further, encouraging investment flows through Systematic Investment Plans (SIPs) and rising investments from B-30 cities contributed significantly to this growing AUM.
T-30 refers to the top 30 geographical locations in India and B-30 refers to the locations beyond the top 30.
“Expansion of asset base during the year was also driven partly by a steady rise in passive investing, with doubling of net inflows to index funds,” SEBI said in the report.
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