Mutual funds see net inflows of ₹2.20 Trillion in Q3FY25

14 Jan 2025 , 02:15 PM

MUTUAL FUND FLOWS IN DECEMBER 2024 QUARTER – MACRO VIEW

Let us begin with the macro picture of quarterly flows for December 2024. The total gross flows into open ended funds in December 2024 quarter stood at ₹34.88 Trillion while the redemptions of open ended funds in the quarter stood at ₹32.68 Trillion, resulting in net inflows into open ended funds overall to the tune of ₹2.20 Trillion. Close-ended funds saw positive flows in the quarter, for a change, thanks to FTPs. In fact, December 2024 quarter was the third quarter in a row of positive net inflows into debt funds. This indicate that, even outside treasury flows, there is genuine interest building up in active debt funds. Here is the macro picture for December 2024 quarter.

Macro picture of flows in mutual funds in December 2024 quarter
Fund Category	Funds Mobilized	Redemptions	Net Flows	Net AUM (Dec-24)
Open Ended Funds	₹34,87,627 Crore	₹32,67,865 Crore	₹2,19,761 Crore	₹66,66,078 Crore
Close Ended Funds	₹226 Crore	₹72 Crore	₹155 Crore	₹26,954 Crore
Mutual Funds Overall	₹34,87,853 Crore	₹32,67,937 Crore	₹2,19,916 Crore	₹66,93,032 Crore

Data Source: AMFI

As of the close of the December 2024 quarter, the net AUM of Indian mutual funds stood at ₹66.93 Trillion; compared to ₹67.09 Trillion in Sep-24, ₹61.16 Trillion in Jul-24, and ₹53.40 Trillion in Mar-24 quarter. This is the first time that net AUM has contracted sequentially, which is largely due to the stock market sell-off by FPIs in the December 2024 quarter.

DEBT FUND FLOWS IN DECEMBER 2024 QUARTER

Flows into Debt Funds in the Dec-24 quarter (AMFI)
Funds Mobilized	Redemptions	Net Flow	Net AUM as of Dec-24
₹30.75 Trillion	₹30.32 Trillion	₹0.43 Trillion	₹15.67 Trillion

Data Source: AMFI

For the third quarter in a row, debt funds saw net inflows, despite the quarter-end treasury redemptions. The net flows into debt funds in the December 2024 quarter at ₹0.43 Trillion; lower than the previous quarters, but positive nevertheless. In the last 3 quarters; there has been a visible trend wherein debt fund investors are willing to lock themselves into long-dated instruments rather than just churning in and out of the short end of the yield curve.

What were the positive and negative drivers of flows in the December 2024 quarter? Let us look at major inflows. Liquid Funds saw net inflows of ₹15,552 Crore, Ultra Short Duration Funds ₹7,606 Crore, Corporate Bond funds ₹5,962 Crore, Low Duration Funds ₹5,664 Crore, and Overnight funds ₹5,455 Crore. The other positive flows were relatively smaller. What about the outflows? In the December 2024 quarter; Floater Funds saw net outflows of (₹1,673 Crore), Short Duration Funds (₹1,673 Crore), Medium Duration Funds ₹(927) Crore, and Credit Risk Funds (₹909 Crore). Out of the 16 categories of debt funds, 12 categories saw positive flows in the December 2024 quarter, while 4 categories saw outflows.

How does the AUM of debt funds compare? Total AUM of active debt funds at the close of December 2024 stood at ₹15.67 Trillion; compared to ₹14.97 Trillion, ₹14.13 Trillion, and ₹12.62 Trillion in the previous 3 sequential quarters. What about share of debt fund net AUM in overall AUM. As of Dec-24 end the share of debt fund AUM stood at 23.42%; compared to 22.32%, 23.11%, and 23.64% in the previous 3 sequential quarters.

COLOUR OF EQUITY FUND FLOWS IN DECEMBER 2024 QUARTER

Flows into Equity Funds in the Dec-24 quarter (AMFI)
Funds Mobilized	Redemptions	Net Flow	Net AUM as of Dec-24
₹2,08,540 Crore	₹89,554 Crore	₹1,18,986 Crore	₹30.58 Trillion

Data Source: AMFI

Net flows into equity funds in the December 2024 quarter stood at ₹1,18,986 Crore; compared to ₹1,09,772 Crore, ₹94,222 Crore, ₹71,280 Crore, ₹52,491 Crore, and ₹41,963 Crore in the previous 5 sequential quarters. Needless to say, the biggest thrust to the AUM accretion for equity funds came from thematic funds, although others also contributed.

Let us first look at the positive inflows in the December quarter. Like in the last 2 quarters; Sectoral & Thematic funds led the way with quarterly net flows of ₹35,268 Crore. This was followed by multi-cap/flexi-cap funds at ₹25,294 Crore, Mid Cap funds at ₹14,660 Crore, Large & Mid cap funds at ₹13,369 Crore, Small Cap Funds ₹12,552 Crore, Large Cap funds at ₹8,011 Crore, and Value/Contra funds at ₹6,059 Crore. None of the equity categories saw net outflows in the December 2024 quarter.

The total AUM of equity funds as of December 2024 stood at ₹30.58 Trillion; compared to ₹31.11 Trillion, ₹27.68 Trillion, and ₹23.49 Trillion in the previous 3 sequential quarters. The contraction in AUM in the latest quarter is due to the FPI sell-off. What about AUM share. As of December 2024, the AUM share of equity funds stood at 45.68%; compared to 46.36%, 45.26%, 43.99%, and 42.92% in the previous 4 sequential quarters.

HYBRID FUND FLOWS IN DECEMBER 2024 QUARTER

Flows into Hybrid Funds in the Dec-24 quarter (AMFI)
Funds Mobilized	Redemptions	Net Flow	Net AUM as of Dec-24
₹1,09,892 Crore	₹83,557 Crore	₹26,336 Crore	₹9.29 Trillion

Data Source: AMFI

In December 2024 quarter, hybrid fund saw relatively subdued net inflows of ₹26,336 Crore; the lowest net inflow in the last 4 quarters. Here, even solution funds have been classified under hybrid funds. Which category of funds dominated the net inflows into hybrid funds in the December 2024 quarter. Not surprisingly, Multi-asset allocation funds (MAAF) dominated the quarterly hybrid flows at ₹8,815 Crore; followed by Balanced Advantage Funds (BAF) ₹5,622 Crore, Arbitrage Funds ₹5,420 Crore, Equity Savings Funds ₹2,784 Crore and Balanced Hybrid Funds ₹2,612 Crore. In the December quarter, there was no category of hybrid or solution funds with net outflows; although other inflows were marginal.

Total AUM of hybrid funds (including solution funds) at the end of December 2024 quarter stood at ₹9.29 Trillion; compared to ₹9.29 Trillion, ₹8.60 Trillion, and ₹7.67 Trillion in the previous 3 sequential quarters. AUM share of hybrid funds in overall AUM stood at 13.89% as of December 2024; compared to 13.84%, 14.06%, and 14.36% in previous 3 quarters.

PASSIVE FUND FLOWS IN DECEMBER 2024 QUARTER

Flows into Passive Funds in the Dec-24 quarter (AMFI)
Funds Mobilized	Redemptions	Net Flow	Net AUM as of Dec-24
₹94,342 Crore	₹63,068 Crore	₹31,274 Crore	₹11.12 Trillion

Data Source: AMFI

Passive funds saw the intensity of flows slowing in the last few quarters. For the December 2024 quarter, net inflows into passive funds stood at ₹31,274 Crore; compared to ₹32,631 Crore and ₹41,762 Crore in the previous two sequential quarters. Let us now turn to how the various categories of passive funds saw flow traction in the December 2024 quarter.

There was strong positive traction in index funds which saw net inflows of ₹17,060 Crore followed by index ETFs at ₹10,415 Crore while gold ETFs saw net inflows of ₹3,858 Crore in the December 2024 quarter. FOFs investing overseas saw marginal net outflows. In terms of AUM share, the passive funds had an AUM share of 16.61% in December 2024; compared to 17.08%, 17.14%, and 17.50% in the last 3 sequential quarters. The share of passive funds in overall AUM appears to be steadily falling.

WHAT WE READ FROM THE DECEMBER 2024 AMFI QUARTERLY REPORT?

To sum it up, the December 2024 quarter, had some interesting takeaways for investors.

• Debt funds saw positive quarterly flows in the December 2024 quarter for the third quarter in a row; indicating that investors are going beyond treasury management.
• Active and hyper active funds appear to be the flavour of the last few quarters, at the cost of passive funds, as retail investors continue to be optimistic on alpha.
• NFOs and SIPs are making a difference. However, NFOs near market highs and rising SIP Stoppage ratio are definitely concerns.

To sum up, it has been an interesting quarter when flows into active equity funds have been robust, despite the market uncertainty.