Economic Survey 2023: Mutual fund inflows slump 72% YoY during April-November period

Income or debt-oriented schemes saw net outflows of Rs 1.1 trillion until November of this financial year.

Asset management companies witnessed significantly lower net inflows at Rs 70,000 crore during the April-November period of the financial year 2023 than last year on higher redemptions, said the Economic Survey 2023, which was tabled in Parliament on January 31.

During the April-November period of the financial year 2022, Indian mutual funds saw net inflows of Rs 2.5 trillion. There were gross inflows of Rs 58.6 trillion, while redemptions were to the tune of Rs 56.1 trillion.

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However, redemptions jumped to Rs 68.4 trillion during the first eight months of the current financial year, while there were gross inflows of Rs 69.1 trillion, the Economic Survey showed.

During the whole of the financial year 2022, mutual funds witnessed net inflows of Rs 2.5 trillion and redemptions of Rs 90.7 trillion.

The year of 2022 was rocked by the Russia’s war on Ukraine and heightened volatility in global stock markets on the back of the US Federal Reserve hiking interest rates. That said, inflows through systematic investment plans (SIP) in mutual funds in India, continued unabated.

The document further noted that during the April-November period this year, some schemes comprising growth or equity-oriented schemes and solution-oriented schemes observed significantly higher inflows than in the previous year.

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On the other hand, income or debt-oriented schemes and hybrid schemes recorded outflows compared to inflows in the same period of the previous year.

Outflows from liquid funds and hybrid schemes were mainly affected by increasing interest rate cycles, liquidity requirements and advance tax commitments by corporates, the Survey noted.

Income or debt-oriented schemes saw net outflows of Rs 1.1 trillion until November of this financial year, while growth or equity-oriented ones saw net inflows of Rs 90,000 crore. Hybrid schemes saw outflows worth Rs 13,649 crore during this period.

Notably, other schemes comprising index funds, gold exchange-traded funds (ETFs), other ETFs and fund of funds investing overseas saw net inflows of Rs 1 trillion this year.

Notably, the mutual fund industry's assets under management (AUM) increased by 8.1 percent at the end of November 2022 on a YoY basis, thanks to the market performance.

The AUM of the Indian mutual industry stood at Rs 40.4 trillion at the end of November 30, 2023, while it was Rs 37.3 trillion a year ago.