Passive funds
Passive funds continued to see growth in assets; the segment continued to benefit from institutional investment flows into exchange traded funds (ETFs) from investors such as provident funds. ETFs as a category have assets of Rs 6.64 lakh crore as of March 2024. The category also saw inflows of Rs 42,000 crore in the fiscal compared with inflows of ~Rs 61,000 crore for the entire passive funds category.
Passive funds experienced ongoing asset growth, largely fueled by institutional investment flows into exchange-traded funds (ETFs), particularly from investors like provident funds. As of March 2024, ETFs collectively held assets worth Rs 6.64 lakh crore. Throughout the fiscal year, this category attracted inflows totaling Rs 42,000 crore, compared to approximately Rs 61,000 crore for the entire passive funds category.
Debt funds demonstrated modest growth of about 7% in fiscal 2024, reaching a total asset value of Rs 12.62 lakh crore. This follows contractions of 2% and 9% in fiscal years 2022 and 2023, respectively. Despite the removal of indexation benefit, investor confidence in the segment remained intact, resulting in a marginal increase of over 5,000 folios in fiscal 2024. Money market and liquid funds experienced the highest absolute asset gains, with increases of Rs 40,000 crore and Rs 31,000 crore, respectively. Money market funds also saw the second-highest percentage growth at 37% during the fiscal year.
In contrast, long-duration funds witnessed the highest percentage growth at 45%, closing with assets worth Rs 12,700 crore. Overnight funds, however, experienced a significant decline of 36%, serving as the primary detractor in the debt mutual fund category for the year.
The adoption of systematic investment plans (SIPs) by investors continued to rise, with monthly net inflows reaching around Rs 19,300 crore in March 2024. Throughout fiscal year 2024, net inflows through SIPs totaled nearly Rs 2 lakh crore, compared to Rs 1.55 lakh crore in the previous fiscal year. SIP assets amounted to Rs 10.71 lakh crore as of March 2024, constituting over 20% of industry assets. Additionally, the number of SIP accounts reached nearly 8.4 crore, with approximately 17 lakh accounts added each month.
Equity-oriented mutual fund categories expanded by 55% in fiscal 2024, reaching Rs 23.50 lakh crore, driven by robust inflows and mark-to-market gains. The category attracted net inflows of Rs 1.84 lakh crore during the fiscal, up from Rs 1.47 lakh crore in the preceding fiscal year.
The overall category also benefited from significant growth in the underlying equity markets, resulting in mark-to-market gains in industry assets. The Nifty 50 Total Return Index (TRI) and Nifty 500 TRI increased by approximately 33% and 44%, respectively, during the fiscal year.
The flexi-cap category emerged as the largest fund category, boasting assets exceeding Rs 3.50 lakh crore as of March 2024, followed by large-cap funds with assets totaling Rs 3.14 lakh crore. In terms of percentage growth, the multi-cap fund category experienced the highest growth rate of 85% in fiscal 2024, followed by small-cap funds at 82%.
