Nation’s mutual fund assets near Rs 60 lakh crore in May, fastest growth on record

Mutual fund asset growth in May: India's mutual fund assets surged to Rs 58.6 lakh crore ($701.90 billion) in May, nearing a remarkable addition of Rs 10 lakh crore in under a year, marking the fastest rise on record, according to data released on Monday.

While it took the mutual fund industry five decades to accumulate its first Rs 10 lakh crore of assets since its inception in 1964, the latest Rs 9 lakh crore was added in less than six months.

Equity mutual fund inflows soared 83 per cent month-on-month to Rs 34,697 crore in May, with investors showing a strong preference for small- and mid-cap stocks, according to data from the Association of Mutual Funds in India (AMFI).

Net equity mutual fund inflows in May were the highest on record since April 2019, when AMFI began reporting monthly mutual fund flows in the current format.

Domestic equity mutual funds have experienced net inflows every month since February 2021, totalling Rs 5.58 lakh crore, significantly outpacing net foreign inflows during the same period.

The benchmark NSE Nifty 50 index has risen approximately 55 per cent over the past 39 months, driven by mutual fund inflows.

Growth despite high valuations 

Despite concerns over high valuations, inflows into small-cap funds increased 23.4 per cent to Rs 2,725 crore in May, while mid-cap fund inflows jumped 45.3 per cent to Rs 2,606 crore. Large-cap inflows nearly doubled to Rs 663 crore.

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

In May, the benchmark Nifty 50 and small-cap indices fell by 0.33 per cent and 1.85 per cent, respectively, while mid-cap indices rose by 1.65 per cent.

Contributions to systematic investment plans (SIPs) reached a record high of 209.04 billion rupees in May. Additionally, sectoral and thematic fund inflows hit a record Rs 19,213 crore in May, driven by interest in New Fund Offers (NFOs).

(With Reuters inputs)