Mutual fund assets close in on 60 trillion rupees milestone in May

Mutual fund assets surged to 58.6 trillion rupees in May, approaching a record increase of nearly 10 trillion rupees in under a year.

This marks the fastest growth in the history of the country's mutual fund industry, according to data released on Monday.

The mutual fund industry, which started in 1964, took five decades to accumulate its first 10 trillion rupees of assets. However, it has added the last 9 trillion rupees in less than six months.

Inflows into equity mutual funds increased by 83% in May compared to the previous month, reaching 34,967 crore rupees.

Investors continued to favour small and mid-cap funds, based on data from the Association of Mutual Funds in India (AMFI).

These net equity mutual fund inflows are the highest recorded since April 2019, when AMFI began reporting monthly mutual fund flows in their current format.

Domestic equity mutual funds have consistently seen net inflows each month since February 2021, amounting to 5.58 trillion rupees. This figure surpasses net foreign inflows during the same period.

The Nifty50 index has risen about 55% over the past 39 months, supported by these mutual fund inflows.

Despite some concerns over high valuations, small-cap funds saw inflows rise by 23.4% to 2,725 crore rupees in May.

Mid-cap funds also experienced an increase, with inflows up by 45.3% to 2,606 crore rupees while large-cap funds saw their inflows nearly double to 663 corer rupees.

"Over the last year, small- and mid-cap categories attracted significant inflows due to their growth potential. Stress tests have indicated that there is no liquidity stress in the two categories, comforting investors and spurring continuous allocation," said Feroze Azeez, deputy chief executive at Anand Rathi Wealth.

The Nifty50 index fell by 0.33%, and the small-cap index dropped by 1.85% in May, while the mid-cap index saw an increase of 1.65%.

At the same time, investments in systematic investment plans (SIPs) reached an all-time high of 20,904 crore rupees for the month.

Sectoral and thematic fund inflows also hit a record, amounting to 19,213 crore rupees in May, driven by a strong interest in New Fund Offers (NFOs).