Mutual fund investments logs growth in Northeastern states: ICRA Analytics

CHENNAI — The Average Net Assets Under Management (AAUM) of the Northeastern states grew by nearly 145 per cent from 2020 to touch INR 40,324 crore in March 2024, up from INR 16,446 crore in March 2020, said ICRA Analytics.

According to ICRA Analytics, the AAUM growth indicates a growing appetite among investors from smaller towns and cities to invest in mutual funds.

“The share of the northeastern states increased to 0.73 per cent of the total AAUM of the mutual fund industry, which stood at INR 55.01 lakh crore in March 2024, up from around 0.67 per cent in March 2020, when the industry’s AAUM stood at INR 24.71 lakh crore,” ICRA Analytics said.

Though the contribution of these states to the total AAUM of the industry is still small in percentage terms, there has been a steady and consistent growth in mutual fund inflows in these states backed by increasing awareness among the people and the growing interest among retail investors for investing in equities through the mutual fund route, said Ashwini Kumar, Senior Vice President and Head of Market Data, ICRA Analytics.

Among the eight northeastern states, Assam was the leading contributor with an AAUM of INR 29,268 crore, accounting for nearly 73 per cent of the total AAUM of INR 40,234 crore in March 2024.

The AAUM of Assam grew by nearly 159 per cent in the last five years, up from INR 11,298 crore in March 2020.

Meghalaya accounted for 9 per cent of the total AAUM at INR 3,623 crore in March 2024, clocking a 111 per cent growth over INR 1,714 crore in March 2020. Tripura accounted for 5 per cent at INR 2,174 crore (INR 1,155 crore in March 2020); Nagaland 4 per cent at INR 1,668 crore (INR 965 crore in March 2020); Arunachal Pradesh 3.8 per cent at INR 1,532 crore (INR 525 crore in March 2020); Manipur 2.9 per cent at INR 1,152 crore (INR 403 crore in March 2020), while Mizoram accounted for 2.25 per cent at INR 907 crore (INR 386 crore in March 2020), ICRA Analytics said.

“There has been a steady increase in awareness about the various investment options among the people, primarily from smaller towns and cities.

This, coupled with growing financial literacy and the surge in interest among retail investors for investing in equities through the mutual fund route, contributed to the good growth in AAUM in towns and cities beyond the top 30.

“The investor awareness campaigns conducted by the AMCs (asset management companies) in the northeastern region have also helped build awareness among the people,” Kumar said.

Meanwhile, the Indian mutual fund industry continued its growth momentum with a steady rise in inflows across both debt and equity-oriented schemes in April 2024.

The net AUM of the industry, which registered 35 per cent growth in 2023-24, continued to post a stellar performance in April and grew by nearly 38 per cent on a year-on-year basis to touch INR 57.26 lakh crore, as compared to INR 41.62 lakh crore in April 2023, ICRA Analytics said.

Sequentially, the net AUM grew by 7 per cent as compared to INR 53.40 lakh crore in March 2024. Net inflows surged by 97 per cent to INR 2.39 lakh crore, as against INR 1.21 lakh crore in April 2023.

Net inflows into debt-oriented schemes under the open-ended category grew by 78 per cent to INR 1.90 lakh crore in April 2024, up from INR 1.07 lakh crore last year.

“The Reserve Bank of India’s stance to maintain a status quo on policy rates for the next one or two quarters is likely to lead to some softness in yields in the near term. However, the investors are likely to be a little watchful of the developments around the election months and will keep a close watch on the global interest rates,” Kumar said.

Inflows into equity-oriented schemes increased by 192 per cent to INR 18,917 crore (INR 6480 crore), while the sectoral/thematic funds registered 741 per cent growth in inflows at INR 5,166 crore in April 2024, as against INR 614 crore in the year-ago period.