In the first 10 months of 2023, Mutual Funds (MFs) have outpaced Initial Public Offers (IPOs) through New Fund Offers (NFOs), signaling a shift in investor preference towards mutual fund investments. During this period, MFs raised approximately Rs 51,399 crore through 142 NFOs, while IPOs accumulated Rs 32,200 crore.
The buoyancy in the market has led to robust fundraising by mutual funds, with equity NFOs alone garnering Rs 28,429 crore, the highest being Rs 10,516 crore in the September quarter. Among equity offerings, thematic funds led the way with 22 NFOs raising Rs 12,372 crore, followed by flexi-cap and multi-cap funds with Rs 2,478 crore and Rs 7,220 crore, respectively.
In contrast, IPO activity saw 40 companies completing offerings in 2023, with only 10 of them exceeding Rs 1,000 crore in fundraising. Additionally, IPOs in the March quarter amounted to a modest Rs 880 crore, while MFs garnered Rs 20,173 crore through 57 NFOs during the same period.
The preference for hybrid NFOs over debt funds has been noticeable, particularly after the removal of indexation benefits for Long-Term Capital Gains (LTCGs) in April 2023. Hybrid NFOs attracted Rs 9,684 crore, with a substantial inflow of Rs 7,480 crore in the September quarter.
Despite the equity market rally, MFs managed to raise Rs 9,863 crore through debt fund NFOs, with significant inflows of Rs 6,061 crore and Rs 3,602 crore in the March and September quarters of 2023, respectively. Furthermore, passive funds, including Fund of Funds (FoFs) investing overseas, received investments totaling Rs 3,287 crore during NFOs, with 31 index funds raising Rs 1,917 crore in the March quarter of 2023.
Overall, the surge in MF NFOs underscores investor confidence in mutual fund investments, driven by diverse offerings across asset classes and market segments
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