How mutual fund AUM across fund classes moved over the year?

20 Mar 2023 , 09:34 AM

One of the key parameters used to gauge the growth and reach of mutual funds is the assets under management. AMFI has now published MF flow and AUM data up to February 2023, so a comparison with February 2022 gives an illustrative picture of how the AUMs have moved over the year and what has triggered this shift in AUMs over the last one year. 

Macro picture of mutual funds AUM

The table captures the overall picture of the assets under management (AUM) of mutual funds, spread across open-ended funds and close-ended funds.

Macro Picture	No. of Schemes (Feb-23)	No. of Schemes (Feb-22)	Net AUM (Feb-23) Rs crore	Net AUM (Feb-22) Rs crore	AUM Growth YOY (%)
Open-ended Schemes	1,253	1,109	39,14,716	36,95,157	5.94%
Close-ended and Interval Schemes	163	370	31,541	61,139	-48.41%
Grand Total	1,416	1,479	39,46,257	37,56,296	5.06%

Data Source: AMFI

At a macro level, the AUM of Indian mutual funds grew by 5.06%, entirely driven by growth in open ended funds. The close-ended funds not only saw the number of schemes reducing by more than half on a yoy basis, but even the close-ended AUM almost halved over last year. The open-ended funds saw AUM accretion of 5.94%, largely driven by flows into equity schemes and passive funds and little contribution from market level wealth creation.

How AUM of active debt funds moved over last year?

The table captures the movement in the AUM of debt funds over last year across various active debt fund categories.

Active Debt Funds	Total Schemes (Feb-23)	Total Schemes (Feb-22)	Net AUM (Feb-23) Rs crore	Net AUM (Feb-22) Rs crore	AUM Growth YOY (%)
Long Duration Fund	6	2	4,081	2,550	60.02%
Gilt Fund with 10-year constant duration	5	4	1,797	1,335	34.57%
Gilt Fund	22	21	16,795	15,691	7.03%
Money Market Fund	22	20	1,18,620	1,19,233	-0.51%
Liquid Fund	36	38	3,86,490	3,89,305	-0.72%
Ultra-Short Duration Fund	25	27	88,805	90,437	-1.80%
Overnight Fund	32	31	1,03,091	1,15,555	-10.79%
Dynamic Bond Fund	22	26	23,365	26,199	-10.82%
Credit Risk Fund	15	15	24,410	28,052	-12.98%
Corporate Bond Fund	21	21	1,14,845	1,41,569	-18.88%
Medium to Long Duration Fund	12	13	8,664	11,103	-21.96%
Medium Duration Fund	15	16	25,867	33,842	-23.57%
Low Duration Fund	21	23	92,215	1,21,217	-23.93%
Short Duration Fund	25	26	90,970	1,24,564	-26.97%
Banking and PSU Fund	23	22	73,324	1,01,148	-27.51%
Floater Fund	12	12	56,324	87,596	-35.70%
Active Debt Funds Total	314	317	12,29,660	14,09,397	-12.75%

Data Source: AMFI

Let us look at the number of active debt fund schemes first, which have fallen marginally over last year. The only category to see new schemes was the long duration category as investors preferred to lock in their funds at higher yields. Most of the other flows came into debt index funds, which are classed separately. Out of 17 schemes, only 3 schemes (with longer duration) saw accretion in AUM, with the other 14 categories seeing fall in AUM over last year. There was a clear preference away from many of the shorter duration schemes with substantial discretion offered to the fund manager. Overall debt funds saw compression in AUMs by 12.75% over last year, with floater funds, banking funds and shorter duration funds being the worst hit in terms of AUM compression.

AUM of active equity funds gave a good show last year?

Here, we capture the movement in the AUM of active equity funds over last year across various categories of active equity and growth funds.

Active Equity Funds	No. of Schemes (Feb-23)	No. of Schemes (Feb-22)	Net AUM (Feb-23) Rs crore	Net AUM (Feb-22) Rs crore	AUM Growth YOY (%)
Multi Cap Fund	18	14	66,875	42,784	56.31%
Small Cap Fund	24	24	1,31,568	1,00,407	31.04%
Large & Mid Cap Fund	26	27	1,26,648	1,03,409	22.47%
Mid Cap Fund	29	27	1,83,246	1,52,548	20.12%
Value Fund/Contra Fund	22	22	89,510	75,627	18.36%
Sectoral/Thematic Funds	125	117	1,68,775	1,43,325	17.76%
Flexi Cap Fund	35	31	2,40,791	2,16,341	11.30%
Large Cap Fund	31	32	2,35,168	2,16,794	8.47%
Dividend Yield Fund	8	8	10,183	9,422	8.08%
Focused Fund	26	26	99,014	92,851	6.64%
ELSS	42	40	1,49,998	1,41,036	6.35%
Active Equity Funds Total	386	368	15,01,778	12,94,545	16.01%

Data Source: AMFI

Out of the 12 categories of active equity funds, all the categories saw accretion in AUMs over last year. What about number of schemes. One must remember that current regulations restrict any AMC from launching more than one scheme of the same category, except in case of flexi-cap funds and sectoral / thematic funds. Hence, you would typically see the accretion coming from that category, unless a new AMC comes into the picture or an existing AMC is not represented in any particular category. However, the 16% AUM accretion over last year has largely been an outcome of increase in the number of folios, SIP flows and a persistent supply of NFO money into equity oriented active funds. 

Another interesting trend is that bulk of the inflows have gone into mid cap and small cap fund; apart from multi cap funds. Clearly, investors seem to be leaning towards stocks beyond the top 100 stocks to generate alpha in their portfolios. In the last few years, the mid cap and small cap funds have not disappointed the investors and that impact is now showing in the AUM accretion in these funds. The 16% AUM accretion over last year is despite the markets hardly gaining 3-4% at an index level on a yoy basis.

AUM growth of hybrid and solutions funds over last year

Here, we capture the movement in the AUM of active hybrid funds and solution funds over last year across various categories. For simplicity, hybrid funds have been combined with solution-based funds.

Active Hybrid Funds	No. of Schemes (Feb-23)	No. of Schemes (Feb-22)	Net AUM (Feb-23) Rs crore	Net AUM (Feb-22) Rs crore	AUM Growth YOY (%)
Multi Asset Allocation Fund	11	10	25,948	18,933	37.05%
Retirement Fund	26	25	17,811	15,931	11.80%
Childrens Fund	10	10	14,170	12,770	10.96%
Conservative Hybrid Fund	20	21	22,716	20,600	10.27%
Dynamic Asset Allocation/BAF	28	26	1,91,440	1,73,639	10.25%
Aggressive Hybrid Fund	31	33	1,53,637	1,44,281	6.48%
Equity Savings Fund	22	22	16,445	16,572	-0.77%
Arbitrage Fund	26	25	77,229	1,01,515	-23.92%
Active Hybrid Funds Total	174	172	5,19,396	5,04,242	3.01%

Data Source: AMFI

Out of the 8 categories of hybrid and solution funds, six categories have shown decisively positive growth in AUM, while the AUM of equity savings funds have been flat. The only category to see a sharp fall in the AUM over last year is Arbitrage Funds, where the AUM has fallen 23.9% over last year. However, it must be remembered that arbitrage funds are not exactly equity/debt hybrids. Instead, then are more of a treasury product and with weak arbitrage returns, there had been a lot of unwinding in arbitrage funds in the last one year.

Despite a small base, the slew of NFOs allowed the multi-asset allocation funds to grow AUM at 37.1% yoy. Dynamic asset allocation Funds (BAFs) had a field period in FY22, but FY23 has not been to favourable for these funds and that is showing in tepid growth in AUM. Overall, the AUM of hybrid and solutions funds have grown by 3%, but what is gratifying is that the AUM at Rs5.19 trillion, makes them an interesting MF asset class.

But it was Passive Funds that ruled the AUM game

Here, we capture the movement in the AUM of passive index-based funds and ETFs. These refer to index funds in equity and debt and have been the big growth story. 

Passive Funds and ETFs	No. of Schemes (Feb-23)	No. of Schemes (Feb-22)	Net AUM (Feb-23) Rs crore	Net AUM (Feb-22) Rs crore	AUM Growth YOY (%)
Index Funds	163	78	1,38,814	54,737	153.60%
Other ETFs	155	119	4,81,776	3,91,436	23.08%
GOLD ETF	12	11	21,400	18,728	14.27%
Fund of funds investing overseas	49	44	21,893	22,072	-0.81%
Passive Funds and ETFs Total	379	252	6,63,883	4,86,974	36.33%

Data Source: AMFI

Passive funds have, perhaps, been the real story of the last one year. It is not just the 36.3% growth in AUM over last year, but even the unprecedented 50.4% growth in the number of passive schemes. There are two reasons for this growth. Firstly, there are no AMC limits on the number of passive funds and that has helped growth. However, that alone was not sufficient. There has been a subtle shift from active to passive investing as active fund managers (like their global counterparts) struggle to beat the index. As Jack Bogle said, “Why look for a needle in the haystack, when you can buy the entire haystack”.

The biggest takeaway from the AUM growth data is that passive funds and hybrid funds have a combined AUM of nearly Rs12 trillion as of date. This makes these alternate funds the third pillar of the India mutual funds story; apart from active equity funds and active debt funds. That is the big takeaway from the AUM data.