Mutual Funds' Capital Collections Via NFOs Drop 38% YoY To Rs 62,000 Crore In 2022: Report

Asset management companies (AMCs) moped up Rs 62,000 crore through new fund offers (NFOs) in 2022, which was a decline of 38 per cent year-on-year (YoY). However, the number of NFOs increased from 140 in 2021 to 228 in 2022, with a major emphasis on fixed-maturity plans, a media report said.

Of the total number of NFOs in 2022, 179 were open-end, and 49 were closed-end funds, generating Rs 62,187 crore, PTI reported citing data from Morningstar India, a market research company.

In 2021 and 2020, NFOs raised Rs 99,704 crore and Rs 53,703 crore, respectively. In addition, the report said there were fewer NFOs in the flexi-cap, multi-cap, and dynamic asset allocation categories.

Experts attributed the higher fund mobilisation in 2021 compared to 2022 to factors like conducive capital market conditions and high optimism of investors leading to a steep bullish streak. As such, the NFOs could capitalise on investors’ positive moods and attract investment.

At the time, the Securities and Exchange Board of India (Sebi) and the industry body the Association of Mutual Funds of India (AMFI) introduced several investor-friendly changes, including the removal of exit-load and the capping of entry-load, besides the categorisation of mutual fund schemes, etc.

In 2021, several big-bang NFOs were launched in the flexi-cap, multi-cap, and dynamic asset allocation segments, while in 2022, the focus was primarily on debt-oriented schemes.

NFOs in the index fund segment, totaling the highest number of schemes at 84, raised Rs 11,235 crore, fixed-term plans (49) mobilised Rs 12,467 crore, and ETFs (39) collected Rs 3,405 crore. Furthermore, the report said, 27 NFOs were launched in the equity category, and five in the hybrid category.

Retail Investors Key Participants

According to an AMFI report, retail investors accounted for the bulk of mutual fund accounts in 2022, accounting for more than 90 per cent of the total 141,119,590 MF accounts.

High net-worth individuals (HNIs) and institutional investors accounted for 11,582,824 and 960,524 MF accounts, respectively, as of December. Overall, there was a 17 per cent increase in the number of mutual fund accounts compared to the previous year ending December 2021.

Equity-oriented schemes were the top draw among investors, accounting for 67.5 per cent of all mutual fund accounts, followed by exchange-traded funds (ETFs) and fund of funds (FoF) at 12.5 per cent, and hybrid funds at 8.5 per cent, respectively.

Not surprisingly, ETFs and FoFs surpassed the hybrid and debt-oriented funds to become the second largest category in terms of accounts as of December 2022, AMFI said.

Liquid and money market schemes stood at 2.2 per cent, debt-oriented funds, including gilt funds, at 3 per cent, index funds at 2.3 per cent, and solution-oriented funds at 4 per cent.