Share of debt mutual funds in industry AUM wilts markedly, shows data

The share of debt mutual funds (MFs) in the overall industry assets has shrunk dramatically over the past 16 months. 

At the end of July, the assets under management (AUM) of debt MF schemes (including closed-ended schemes) stood at Rs 12.64 trillion - 33.5 per cent of the overall AUM of Rs 37.8 trillion for the domestic MF industry. This is a sharp fall, compared to April 2021, when debt AUM accounted for 47 per cent of the overall industry AUM.

This change in mix - more in favour of equity assets - is a healthy sign for the industry, which corrals more money for managing equity schemes than debt.

The share of debt MFs has been consistently sliding after the pandemic, with interest rates headed south and stock markets ascending. While the overall AUM pie has grown 17 per cent since April 2021, debt AUM has compressed 17 per cent.

Meanwhile, non-debt AUM — largely equity — has risen 46 per cent during this period, driven by persistent inflows into equity-oriented schemes and rising asset prices.