New Delhi: The investment landscape in mutual funds is witnessing a steady increase in monthly contributions, yet a notable trend has emerged, characterized by a significant escalation in redemptions. This trend is attributed to investors seizing opportunities to cash in on market peaks, thereby reducing the disparity between investments and redemptions.
According to the data presented in the Axis Mutual Funds' monthly report, the total Assets Under Management (AUM) for mutual funds in July 2024 witnessed a remarkable 40 per cent growth compared to the preceding year. Concurrently, there was a staggering 61 per cent increase in redemptions over the same period.
The AUM for July 2024 reached a staggering figure of Rs 64,96,653 crore, a substantial increase from the previous year's figure of Rs 46,37,564 crore. Conversely, redemptions in July 2023 escalated to Rs 18,28,851 crore, which surged by an impressive 60.68 per cent to reach Rs 29,38,613 crore in July 2024.
Experts attribute the surge in mutual fund investments over the past year to the superior returns offered by the sector. This increase is largely due to the exceptional performance of the Indian stock markets in the previous year.
However, the report also highlights a concerning trend of rising redemptions, attributed to the heightened market risk at an all-time high. The data reveals that while mutual fund investments experienced a growth of 40 per cent, redemptions or equity outflows from the funds surged by over 60 per cent.
Furthermore, the report sheds light on the mutual fund industry's robust performance in June 2024, particularly in the Exchange-Traded Funds (ETFs) segment, which recorded gross sales of Rs 18,349 crore. This surge was further supported by the introduction of six new schemes, collectively raising Rs 179 crore, underscoring a strong investor interest in innovative investment avenues.
"The mutual fund AUM for July 2024 saw a 6.23 per cent increase over June 2024. Equity funds experienced outflows in July 2024, reaching a figure of Rs 44,076 crore," the report states.
The data further indicates that sectoral and thematic categories have emerged as key drivers of the market, with net inflows reaching an impressive Rs 9,790 crore. This trend underscores a growing investor preference for targeted investment strategies that align with specific sectors or themes, capitalizing on market opportunities.
Moreover, the cash AUM witnessed a modest increase of 1.95 per cent since July 2023, suggesting a stable liquidity position within the industry. The retail segment, in particular, has demonstrated remarkable growth, achieving a compound annual growth rate (CAGR) of 31.55 per cent.
