Mutual funds collect Rs 66,364 core through NFOs in FY24

New Delhi: Asset management companies (AMCs) floated 185 new fund offerings mobilising Rs 66,364 crore in 2023-24, marking a 6.5 per cent increase from the previous year, amidst growing interest of retail investors and significant uptrend in broader markets.

This was higher than Rs 62,342 crore garnered by AMCs through 253 New Fund Offerings (NFOs) in 2022-23.

"The financialisation of savings in India is currently underway, signifying a growing recognition among investors that investing in financial assets is integral to building wealth. With income and expenditure levels rising constantly, there is a heightened need to channel monthly savings into avenues offering higher returns. The substantial inflow of investments into equities underscores a notable shift in investor attitudes and risk appetites," FYERS Research said in its report.

As India's growth narrative gains momentum and investment opportunities expand, many unlisted companies seek capital market support. This trend bodes well for investors seeking growth opportunities and aspiring to participate in the long-term journeys of these companies, it added.

As per the FYERS report, the January-March period of 2024 saw the highest number of NFOs at 63 with the fund mobilisation totalling Rs 22,683 crore. This was followed by the October-December period of 2023, when AMCs introduced 49 NFOs and mobilised Rs 16,093 crore.

Usually, NFOs come during a surging market when investor sentiments are high and optimistic. The NFOs were floated to capitalise on the mood of investors and attract their investment as they were willing to invest at that time.

Industry experts said that the stock market performance along with the positive investor sentiments led to higher fund mobilisation through NFOs in 2023-24. The benchmark indices performed exceptionally well in FY24, delivering impressive returns to investors with Nifty 50 yielded a return of 28.6 per cent.

Domestic Institutional Investors (DIIs) bought equities worth over Rs 2 lakh crore in FY24, supported by a steady monthly inflow of funds from retail investors. The contribution to Systematic Investment Plans (SIPs) increased from Rs 13,720 crore per month in April 2023 to Rs 19,270 crore by March 2024.

The mutual fund industry witnessed a significant increase in net flows, reaching Rs 3.55 lakh crore in FY24, way higher than the previous year's inflows of Rs 76,225 crore.

Among the three main categories of schemes, the hybrid category experienced the maximum change in inflows, with net flows surging to Rs 1.45 lakh crore in FY24, compared to an outflow of Rs 18,813 crore in FY23.

Besides, the equity-oriented category attracted Rs.1.84 lakh crore in FY24, marking a 25.4 per cent increase from the preceding fiscal.

The debt category saw outflows from the schemes as investors anticipated a pause in the interest rate hike cycle and shifted their investments from debt to equity and hybrid categories.