In the dynamic landscape of investment opportunities, Mutual Funds (MFs) have emerged as frontrunners in the financial markets, surpassing Initial Public Offers (IPOs) in terms of fundraising through New Fund Offers (NFOs) in the initial 10 months of 2023.
During this period, MFs raised an impressive sum of approximately Rs 51,399 crore through 142 NFOs, outshining the Rs 32,200 crore accumulated through IPOs. This indicates a notable shift in investor sentiment towards MFs, highlighting their growing popularity as investment vehicles.
The buoyancy in the market, characterized by a bullish trend, has propelled mutual funds to raise substantial capital, particularly through equity NFOs. With Rs 28,429 crore raised through equity NFOs, the sector witnessed robust activity, with the September quarter alone contributing Rs 10,516 crore to this total.
Among the equity offerings, thematic funds emerged as the preferred choice for investors, with 22 NFOs garnering Rs 12,372 crore. Additionally, flexi-cap and multi-cap funds also attracted significant investments, raising Rs 2,478 crore and Rs 7,220 crore, respectively. This diversification of offerings reflects the evolving preferences of investors seeking exposure to different market segments.
In contrast, the IPO market saw relatively subdued activity, with only four companies introducing IPOs in the March quarter, raising approximately Rs 880 crore. During the same period, MFs invested a substantial amount of Rs 20,173 crore through 57 NFOs, underscoring the robust demand for mutual fund offerings.
Hybrid NFOs emerged as a favored choice over debt funds, which faced challenges following the removal of indexation benefits for computing Long-Term Capital Gains (LTCGs) in April 2023. Despite this, hybrid NFOs garnered Rs 9,684 crore, with a significant inflow of Rs 7,480 crore recorded in the September quarter.
Moreover, MFs demonstrated resilience in raising capital through debt fund NFOs, amassing Rs 9,863 crore despite the prevailing market conditions. Noteworthy inflows of Rs 6,061 crore and Rs 3,602 crore were observed during the March and September quarters of 2023, respectively.
Similarly, passive funds, including Fund of Funds (FoFs) investing overseas, attracted investments totaling Rs 3,287 crore during NFOs. Index funds, in particular, witnessed significant activity, with 31 funds raising Rs 1,917 crore in the March quarter of 2023.
Overall, the dominance of MFs in fundraising through NFOs underscores their growing appeal among investors seeking diverse investment avenues, signaling a shift towards mutual funds as preferred investment vehicles in the evolving financial landscape.
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