India Mutual Fund Growth 2024: Assets Near Record 10 Trillion Rupees Addition in Under a Year

India Mutual Fund Growth 2024: India’s mutual fund assets surged to 58.6 trillion rupees ($701.90 billion) in May, edging closer to an unprecedented addition of 10 trillion rupees within a year, according to data released on Monday. This marks the fastest growth on record for the industry.

Historically, it took the mutual fund industry five decades, starting from its inception in 1964, to accumulate the first 10 trillion rupees. However, it has managed to add the latest 9 trillion rupees in under six months.

Equity mutual funds saw an 83% month-on-month increase in inflows, reaching 346.97 billion rupees in May. Investors showed a strong preference for small- and mid-cap funds, as per the Association of Mutual Funds in India (AMFI).

The net inflows into equity mutual funds in May were the highest recorded since April 2019, when AMFI began its current monthly reporting format. Since February 2021, domestic equity mutual funds have consistently seen net inflows, totaling 5.58 trillion rupees, surpassing net foreign inflows during the same period.

This influx has contributed significantly to the benchmark NSE Nifty 50’s approximately 55% rise over the past 39 months. Despite concerns about high valuations, small-cap inflows increased by 23.4% to 27.25 billion rupees in May, and mid-cap fund inflows rose by 45.3% to 26.06 billion rupees. Large-cap inflows nearly doubled to 6.63 billion rupees.

Feroze Azeez, deputy chief executive at Anand Rathi Wealth, noted that small- and mid-cap categories have attracted substantial inflows due to their growth potential. Stress tests have shown no liquidity issues in these categories, which has reassured investors and encouraged ongoing allocations.

In May, the benchmark Nifty 50 fell by 0.33%, while small-caps declined by 1.85% and mid-caps increased by 1.65%. Contributions to systematic investment plans (SIPs) reached a record high of 209.04 billion rupees, and sectoral and thematic fund inflows also set a record at 192.13 billion rupees, driven by interest in New Fund Offers (NFOs).