Mutual funds added Rs 7-lakh cr assets in 2021

New Delhi: Mutual Funds as an investment avenue won the confidence of investors in 2021 with the industry adding a staggering Rs 7 lakh crore to their asset base during the year on the back of buoyant equity markets and a bunch of large new fund offerings (NFOs), but the new year could be tricky depending on the Omicron situation and possible interest rate hikes.

While it may not be an easy money environment in 2022, some experts are hopeful that the impact of the Omicron variant of the novel coronavirus may not be as severe as those witnessed in the first two waves of the pandemic.

“To a large extent, the world has learnt to live with Covid and as such with the rapid vaccination coverage in India, the impact of Omicron on the economy should not be as devastating as the previous waves have been,” said Suresh Soni, CEO of Baroda Mutual Fund.

The AUM of the mutual fund industry grew by 24 per cent to an all-time high of Rs 38.45 lakh crore in 2021 by November- end itself, from Rs 31 lakh crore at the end of December 2020, Association of Mutual Funds in India (Amfi) data showed.

The year 2021 would mark the ninth consecutive yearly rise in the industry AUM after a drop for two preceding years. The investor count is estimated to have grown by a whopping 2.65 crore during the year. In 2020, a little over 72 lakh folios were added.

The asset management companies (AMCs) launched more than 100 NFOs offering different investment ideas, which further led to the surge in the AUM, Quantum Mutual Fund CEO Jimmy Patel said.

Equity-oriented mutual fund schemes have seen a net inflow of Rs 71,600 crore in the year, marking a multi-fold jump from Rs 9,410 crore of the net inflow seen in 2020.SIPs or Systematic Investment Plans, which have been the bedrock of mutual funds flows for many years now, have seen a collection of Rs 1.03 lakh crore, way higher than Rs 97,000 crore mobilised in 2020. The monthly contribution from SIPs rose from Rs 8,023 crore in January to Rs 11,005 crore in November.

On the other hand, debt funds, often considered as a safe bet, were not the highlight of the year as investors explored other investment avenues over them, anticipating an interest rate risk. The segment witnessed a net inflow of Rs 14,500 crore in 2021.

Going into 2022, Primeinvestor. in’s Bala said that inflows into equity will be entirely driven by whether the market will rally or not. Any correction can trigger outflows so the call will be to watch for interest rate moves, the global outcome from the same and its impact on Indian markets. -(PTI)