MFs step up equity buying in August with Rs 70,500 crore, 2nd highest on record
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Mutual funds significantly ramped up their equity investments in August, with net purchases climbing to Rs 70,500 crore.
This marks the second-highest monthly figure on record, trailing only October 2024’s peak of Rs 90,770 crore in equity purchases.
The strong buying activity follows July’s solid investment of Rs 42,702 crore, indicating continued momentum in fund managers’ secondary market activity.
Analysts attribute the surge to robust inflows and strategic positioning amid volatile market conditions.
Meanwhile, India’s mutual fund industry is experiencing rapid growth, with total assets under management (AUM) reaching Rs 74.40 lakh crore, as reported by Motilal Oswal Mutual Fund.
Equity funds remain dominant, holding nearly 60% of total AUM.
The report also noted the rising popularity of passive funds, which now represent around 17% of the industry’s total AUM.
Investors are increasingly opting for passive strategies due to their low costs, transparency, and ability to track market benchmarks.
In the June quarter, mutual funds recorded estimated net inflows of Rs 3.98 lakh crore, primarily driven by debt funds (Rs 2.39 lakh crore), while equities contributed Rs 1.33 lakh crore.
Broad-based equity funds, including Flexi Cap, Small Cap, and Mid Cap categories, remained favored among active strategies, while passive large-cap funds saw consistent demand.
Market experts suggest that August’s sharp rise in equity investments highlights fund managers’ optimism about India’s market fundamentals, despite global uncertainties.
With equity allocations reaching all-time highs and passive investing gaining traction, mutual funds are expected to remain a key contributor to domestic market liquidity.
Separately, a report by ICRA Analytics last month revealed that the net AUM of equity mutual funds surged 335.31% to Rs 33.32 lakh crore in July, compared to Rs 7.65 lakh crore in July 2020.
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