Record inflows into the equity segment took the assets under management (AUM) of equity mutual funds
at the end of August to $111 billion ( Rs 7 lakh crore), 5.3 per cent of the total market capitalisation of Indian equities ( Rs 133 lakh crore). This is the highest level since July 2000, according to Morgan Stanley Investment Management.
August saw inflow of Rs 20,000 crore into equity schemes. It was the 17th consecutive month of positive inflow. The year-to-date inflow tally into equity MFs is Rs 2.2 lakh crore.
Similarly, equity exchange-traded funds’ (ETFs) assets have risen to a new high of $8.4 billion (Rs 54,000 crore). The year-to-date ETF inflow is $2.6 billion or Rs 16,900 crore. Inflow into ETFs has got a leg-up from increased equity allocation by the Employees’ Provident Fund Organisation (EPFO). In May, the retirement body gave its nod to raise the investment limit in ETFs to 15 per cent, from 10 per cent earlier. According to Morgan Stanley estimates, the EPFO potential investment could be Rs 25,000-30,000 crore in equities in 2017-18, of which Rs 5,700 crore has been invested this year so far.
In 2013, equity mutual fund assets accounted for less than three per cent of India’s total market capitalisation. The growing presence of domestic funds in the equities market is seen as a sign of stability and a counterbalance to foreign portfolio investors. In May, Morgan Stanley had said India was witnessing a “domestic liquidity supercycle” and the dream run was just starting.