Why Did MFs Ramp Up Equity Purchases to Rs 70,500 Crore in August?
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Synopsis
In August, mutual funds in India escalated their equity investments to an impressive Rs 70,500 crore, marking a significant milestone in the financial landscape. This surge reflects a robust market confidence amidst global uncertainties, highlighting the resilience and strategic positioning of fund managers. Explore the implications of this trend on the mutual fund industry and market liquidity.
Key Takeaways
- Mutual funds significantly increased equity investments to Rs 70,500 crore in August.
- This marks the second-highest monthly total in history.
- Equity funds now account for nearly 60 percent of total AUM.
- Passive funds have risen to 17 percent of the industry’s AUM.
- Analysts emphasize confidence in India’s market fundamentals.
Mumbai, Sep 5 (NationPress) Mutual funds have notably increased their equity investments in August, with net purchases escalating to Rs 70,500 crore. This figure represents the second-highest monthly total ever recorded, following October 2024 when equity buying soared to Rs 90,770 crore.
The impressive uptick comes on the heels of July’s strong figure of Rs 42,702 crore, indicating a sustained momentum in secondary market acquisitions by fund managers.
According to industry analysts, this boost signifies both healthy inflows and strategic positioning amid a volatile market environment.
Furthermore, India’s mutual fund sector is experiencing rapid growth, with total assets under management (AUM) currently at Rs 74.40 lakh crore, as per a recent report by Motilal Oswal Mutual Fund.
Equity funds continue to lead the market, accounting for nearly 60 percent of total assets.
The report also emphasized the rising significance of passive funds, which now comprise approximately 17 percent of the industry’s total AUM.
Investors are increasingly attracted to passive strategies due to their cost efficiency, transparency, and alignment with market benchmarks.
In the quarter ending June, mutual funds recorded estimated net inflows of Rs 3.98 lakh crore, predominantly driven by debt funds at Rs 2.39 lakh crore, while equities contributed Rs 1.33 lakh crore.
Broad-based equity funds, especially Flexi Cap, Small Cap, and Mid Cap categories, remained popular within active strategies, while passive large-cap funds received consistent investments.
Analysts pointed out that the significant increase in August’s equity investments highlights fund managers’ confidence in India’s market fundamentals, despite prevailing global uncertainties.
With equity allocations reaching historic highs and passive investing gaining traction, the industry is poised to continue as a crucial driver of domestic market liquidity.
Another report from ICRA Analytics last month indicated that the net AUM of equity mutual funds surged by 335.31 percent, reaching Rs 33.32 lakh crore in July, up from Rs 7.65 lakh crore in July 2020.
Point of View
It's crucial to recognize the significant strides being made in India's mutual fund industry. The sharp increase in equity purchases reflects not only investor confidence but also a strategic response to market dynamics. This trend is poised to influence domestic liquidity and investment strategies, positioning India as a key player in the global financial landscape.
NationPress
05/09/2025
Frequently Asked Questions
What led to the increase in mutual fund investments in August?
The increase is attributed to healthy inflows and active positioning by fund managers in response to a volatile market environment.
How does the current AUM compare to previous years?
As of now, the total AUM stands at Rs 74.40 lakh crore, reflecting significant growth from previous years.
What proportion of assets do equity funds hold?
Equity funds account for nearly 60 percent of the overall assets under management in India.
Why are passive funds gaining popularity?
Investors are drawn to passive funds due to their cost efficiency, transparency, and alignment with market benchmarks.
What are the popular categories among equity funds?
Categories such as Flexi Cap, Small Cap, and Mid Cap have remained popular among investors.
