Mutual fund trend in 2023 : will it continue ?

In recent year's i have seen many Younge investors preferring mutual funds investment compared to the traditional asset options . The reason for this changes are many but some of them we can put as need By diversify the portfolio, ablity to take calculated risks, ease of liquidity, the potential of creating wealth and the over all entities , regulators push has resulted in this tremendous flow of sips in mutual tunds .

There are some disadvantage of the Mutual funds which if one has right discipline then it can be surely avoided , EX . its easy to liquidate so one might get tempted to either book profits after seeing the valuation growth or may get panic because of the corrections in the markets .

But still in spite of these, the industry figures are showing encouraging signs . Here are some of the key figures for 2022 -

• The Total AUM for Indian Mutual Fund Industry crossed Rs 40 Lac crores as on 30th November 2022. The same was Rs 7.93 Lac crores in 2012. A stupendous growth of 5X over 10 Years.

• The faith in SIPs remains unflustered. While the data for December is yet to be published, the November gross inflows for SIPs were Rs 13,307 crores. The same was Rs 11,305 crores for December 2021.

• Due to increasing interest rates, geopolitical conflicts, and on account of rising uncertainty, Foreign Portfolio Investors (FPIs) sold Indian shares worth 2.17 Lac crores in the first half of 2022. While they returned to buying in the second half and ended the year at a net selling of 1.21 Lac crores, Nifty still ended 2022 with 4.3% returns, a seventh year of positive returns in a row.

What we can expect in 2023 year -

SIP front - Monthly SIP book to cross $2 bn per month. While this represents a ~25% jump from current monthly SIP levels, it is still small compared to the $3.4 trillion total market cap of NSE-listed stocks. SIP inflows have gained momentum with broader participation. The monthly SIP inflows were Rs 8,532 Crores in January 2020, while the average SIP value was ~Rs 2800, while in November 2022 the SIP Inflows were Rs 13,307 Crores with an average SIP Value of ~Rs 2200.

MF penetration The global MF AUM to GDP is ~75%.India’s MF AUM to GDP ratio of ~15% is at an inflexion point. We believe the regulator should continue to create an environment of trust for it to jump over 20%. The advent of tech-enabled platforms facilitating convenience has been the major reason behind the rise of Mutual Funds in the last few years. The trend is likely to get the mutual funds increasing & effective penetration.

Passive Investing Passive or Index fund AUM has jumped to 15% of total MF AUM from less than 2% five years ago. 2022 witnessed an inflow of more than 10$Bn in passive funds in India. While 2022 saw new active Mutual Fund AMCs come online, 2023 will make passive investing more mainstream, with as many as five passive-only AMCs waiting to be launched.

Along with these key parameters as the government's stand to Boost the per capita GDP income to the Double level from existing Till 2024 Even if it does not happens in this year but it is going to happen sooner or later . This will give the india's major chunk of Younge population additional surplus money to invest in Financial assets like mutual funds . We know younge generations have lot of aspirations and to fulfil their desires , dreams they are willing to plan for their goals . This change has resulted because of the financial literacy and awarenss . On The other side Retirement planning & Child education have become the key Goals for most of the people . This will definitely increase the over all sip and mf inflows in future . Soon there will be campaign like Sabke pass sip ka sath !

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