MUTUAL FUND BRIEFING – DECEMBER 2024
The month of December 2024 saw overall mutual fund AUM contract to ₹66.93 Trillion. December was almost a repeat of October when the sharp correction in the markets led to contraction in AUM. December 2024 also saw sharp outflows from debt funds, which is normal considering quarter end treasury commitments. Hybrid and passive flows were tepid in December. While thematic funds dominated NFO flows, gross SIP flows created another record in December 2024 at ₹26,459 Crore. However, SIP stoppage ratio at over 82% was an absolute show spoiler for the markets.
KEY TRENDS IN MUTUAL FUNDS – SEGMENT LEVEL (DECEMBER 2024)
Mutual fund segment level trends for November 2024 are confined to a macro level with focus on colour and direction of the flows into specific fund classes.
- Average assets under management (AAUM) of all mutual fund schemes, stood at ₹69.33 Trillion in December 2024; compared to ₹68.05 Trillion in November, ₹68.50 Trillion in October, ₹68.00 Trillion in September, and ₹66.04 Trillion in August 2024. Average AUM is still up 35.7% yoy.
- In the last couple of years, we have seen a steady shift in overall AUM mix from active debt to active equity. The share of active equity funds in AUM for December 2024 was down 90 bps from 59.7% to 60.6% MOM; but AUM share was up 410 bps yoy.
- Passive fund share was 20 bps lower at 12.3% in December 2024 on MOM basis but a full 60 bps lower on yoy basis. The share of active debt funds was down 20 bps MOM from 14.8% to 14.6% in December 2024 while share is down 290 bps yoy. Liquid / money market funds share fell 50 bps from 13.0% to 12.5% MOM in December 2024 but down 60 bps yoy.
- There is a distinct shift in AUM share from institutional investors to individual investors. The falling yields on debt funds are pushing investors into equity fund SIPs. Between December 2023 and December 2024, the share of individual investors in the overall MF AUM composition has gone up 130 basis points from 60.1% to 61.4%.
- How much have individual investors allocated across various categories of mutual funds? As of December 2024, individual investors have a share of just 35% in active debt funds and just 12% in short term money market schemes. Individual investors have 88% market share of equity fund assets, but just 12% of passive fund AUM.
- What about the individual investor’s allocation basket. As of December 2024, individual investors have 87% of their mutual fund portfolio in active equity schemes and 9% in active debt funds. Liquid funds at 2% and ETFs at 2% are fairly small. Institutions and corporates have 28% of their corpus in liquid funds, 28% in ETFs / FOFs, 25% in longer active debt funds and just 18% in active equity funds.
As of the close of December 2024, mutual fund AAUM has grown by 35.7% yoy. Assets of individual investors in this period grew by 38.7% while growth in AUM of institutional investors was modest at 31.2%.
KEY TRENDS IN MUTUAL FUNDS – FOLIOS AND TICKET SIZES (DECEMBER 2024)
Folios are investor accounts unique to an AMC and are a good barometer of retail intensity.
- There were total of 22.50 Crore folios as of the close of December 2024 of which retail investors accounted for nearly 91.5%. In addition, HNIs accounted for 7.9% of folios while institutions accounted for balance 0.6%. In case of active debt funds, retail investors account for 72.9% of the folios, while HNI investors account for 24.9%. HNIs also have a high share of folios of liquid funds (25.2%) and hybrid funds (24.1%).
- Between March 2009 and September 2014, mutual fund folios contracted from 4.76 Crore to 3.95 Crore. However, between September 2014 and December 2024, the number of mutual fund folios have jumped from 3.95 Crore to 22.50 Crore. That is a jump of 470% in folios. Since Sep-14, folios have grown at CAGR (compounded annual growth rate) of 18.49%.
- Let us look at average ticket size for equity and debt products. For equity funds (predominantly a retail product), the average ticket size is up 18% you at ₹2.11 Lakhs. In the case of debt funds, the average ticket size is up just 7% at ₹16.52 Lakhs. The net AUM of Indian mutual funds at ₹66.93 Trillion is spread across 22.50 Crore folios, giving a per folio ticket size of ₹2.98 Lakhs.
- Unlike the popular perception, retail investors are not myopic in their approach to equity funds. As per data for December 2024, retail investors hold 58.4% of equity fund assets for more than 2 years.
The surge in individual investor share is linked to SIP flows and NFO flows. The higher stickiness is from the lessons learnt COVID, that persisting is the best idea in SIPs. That is when rupee cost averaging boosts ROI.
KEY TRENDS IN MUTUAL FUNDS – GEOGRAPHICAL MIX (DECEMBER 2024)
How are cities and towns contributing to the mutual fund growth story?
- The mutual fund market is divided into T30 (top-30) cities and B30 (cities beyond top-30). If you compare December 2024 with November 2024, T30 assets were up +1.60% at ₹56.50 Trillion. Total assets of B30 centres increased by +3.16% to ₹12.83 Trillion. If we only look at the share of individuals; in December 2024, B30 cities accounted for 27.16% of individual assets an increase of 12 bps over November 2024. This also meant that the share of individuals in the top-tier T-30 cities fell from 72.96% to 72.84%.
- Despite the Direct route available since 2013, only 46% of the overall assets came through the Direct route, with just about 25% of retail investors and 27% of HNIs investors coming through the direct route.
December was another month of debt fund outflows and equity market correction. Hopefully January 2025 should offer a clearer picture.
