Against the backdrop of sharp gains in broad markets, asset managers launched 212 new fund products in 2023, raising Rs 63,854 crore, slightly higher than last year.
In comparison, asset management companies (AMCs) earned Rs 62,187 crore from 228 new fund issues (NFOs) in 2022. Furthermore, they earned revenue of Rs 99,704 crore in 2021 and Rs 53,703 crore in 2020, according to data compiled by Morningstar India.
“The trend towards financialization of assets in India is unmistakable. With changing consumer behavior and demand for higher living standards, investors are recognizing the importance of long-term investments. The COVID-19 pandemic has highlighted financial planning and creating liquid assets necessity to cope with emergencies and pave the way for wealth accumulation,” FYERS Research said in its report.
The report further said, “Despite the strong performance of the index, driven by strong economic activity, stable GST collections and confidence in government reforms and policies, it may not be prudent to expect similar outperformance in 2024. Various Valuations across all market capitalizations look high, and a cautious approach to direct stocks is recommended in the short term.”
According to the FYERS report, the number of NFOs reached the highest number at 57 between January and March 2023. However, the peak in fund mobilization occurred between July and September, totaling Rs 22,049 crore.
Additionally, 29 thematic or sectoral funds raised a total of Rs 17,946 crore in 2023.
As risk appetite for stocks and awareness of products and products continue to increase, retail investors are choosing products with higher risks compared to other products, such as thematic funds and sector funds.
Typically, NFOs appear during market surges, when investor sentiment is high and optimistic. NFOs are issued to capitalize on investor sentiment and attract investments they are willing to invest at that time.
Industry experts say that stock market performance along with positive investor sentiment has led to an increase in funds raised through NFOs in 2023.
In 2023, the Nifty 50 index returned 20%, mainly supported by earnings growth. The Nifty Midcap and Nifty Smallcap indices have returned as high as 47% and 56% respectively.
Domestic institutional investors (DIIs) injected a huge amount of Rs 1.7 billion into the market, which played a key role in pushing the Indian stock market past the $4 trillion market capitalization milestone.
Overall, the mutual fund industry saw net inflows of Rs 274 crore in 2023, compared with over Rs 71,000 crore in the previous year. The large inflows are likely due to continued investor interest in equity funds, arbitrage funds, index funds and ETFs.
Last year, debt schemes saw a net outflow of Rs 46,100 crore, while equity schemes saw a significant inflow of Rs 1.62 billion, followed by mixed category schemes with an inflow of Rs 93,208 crore.
(This story has not been edited by News18 staff and is published from associated news agency – PTI)
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