Mutual Funds Raise Rs 63,854 Crore Via NFOs In 2023 On Uptrends In Broader Markets

This amount stood marginally higher than the previous year when the AMCs collected Rs 62,187 crore via 228 New Fund Offerings (NFOs)

The report stated that retail investors are going for higher-risk products such as thematic and sectoral funds against other products, due to their increased risk appetite for equities and the awareness of products and offerings

Asset management companies (AMC) launched 212 new fund offerings in 2023 and garnered Rs 63,854 crore during the year, owing to significant uptrends in the broader markets. This amount stood marginally higher than the previous year when the AMCs collected Rs 62,187 crore via 228 New Fund Offerings (NFOs). 

The data compiled by Morningstar India revealed that the AMCs raised Rs 99,704 crore in 2021 and Rs 53,703 crore in 2020, reported PTI. The data revealed that the trend towards the financialisation of assets in India remained unmistakable. Along with evolving consumption behaviours and a need for a higher standard of living, investors are cognizant of the importance of long-term investing, it noted. 

FYERS Research further stated in the report, “The COVID-19 pandemic underscored the necessity for financial planning and the creation of liquid assets to address emergencies and pave the way for wealth-building. Despite indices exhibiting strength, propelled by robust economic activity, steady GST collections, and confidence in government reforms and policies, anticipating a similar outperformance in 2024 may not be prudent. Valuations across various market capitalisations look elevated, advocating a cautious approach to direct equities in the short term.”

The report noted that the January-March period in 2023 saw the NFOs touch the highest number at 57. However, the funds raised reached their peak in the July-September period at Rs 22,049 crore. About 29 thematic or sectoral funds collected an aggregate of Rs 17,946 crore in 2023. 

The report stated that retail investors are going for higher-risk products such as thematic and sectoral funds against other products, due to their increased risk appetite for equities and the awareness of products and offerings. Typically, NFOs come during a surging market when investor sentiments are high and optimistic.

Industry experts said that the stock market performance along with the positive investor sentiments has resulted in the increased fund mobilisation via NFOs in 2023. Notably, in 2023, the Nifty50 index gave returns of 20 per cent, majorly helped by the earnings growth. The Nifty Midcap and Smallcap indices also logged massive returns of 47 per cent and 56 per cent, respectively. 

During the period, the domestic institutional investors (DIIs) poured in a substantial amount of Rs 1.7 lakh crore and the investment played a major role in pushing Indian equities beyond the $4 trillion market capitalisation milestone. The mutual fund industry as a whole saw a net inflow of Rs 2.74 lakh crore in 2023, against Rs 71,000 crore in the preceding year.

This inflow could be attributed to the sustained investors’ interest in equity funds, arbitrage funds, index funds, and ETFs. Debt schemes saw a net outflow of Rs 46,100 crore in the period, while equity schemes saw a major inflow of Rs 1.62 lakh crore, followed by hybrid category schemes at Rs 93,208 crore.