Mutual funds’ collection through new fund offerings falls 38% to `62,000 crore in 2022

New Delhi: Mutual funds’ collection through new fund offerings (NFOs) remained subdued in 2022, with asset management companies (AMCs) garnering over Rs 62,000 crore through new schemes, which was 38 per cent less compared to 2021.

However, higher number of NFOs were launched in 2022 compared to the preceding year. A total of 228 new schemes were floated last year, which was way higher than 140 launched in 2021, according to the data compiled by Morningstar India.

In the year 2022, fund managers focused on passive funds and fixed income categories like fixed maturity plans. In fact, number of fixed income NFOs seem to have doubled in 2022 over the previous year.

According to the data, a total of 179 open-end funds and 49 closed-end funds were launched in the calendar year 2022, and cumulatively, these funds garnered Rs 62,187 crore.

In comparison, 140 NFOs were floated in 2021 and cumulatively, these funds were able to mobilise Rs 99,704 crore and 81 new schemes were launched in 2020 raking in Rs 53,703 crore.

“The year 2022 was relatively dull with low single-digit returns on a couple of key market-cap based indices while some even trod into the negative territory. A combination of inflation-interest rate dynamics, geopolitical upheavals and consequent economic ramifications dented investor sentiments,” Nirav Karkera, Head of Research at Fisdom, said.

In addition, fewer NFOs were launched in core categories of flexicap, multicap and dynamic asset allocation that also affected investment commitments, he added.

Usually, NFOs come during a surging market when investor sentiment is high and optimistic. The stock market performance along with the positive investor sentiments led to higher fund mobilisation through NFOs in 2021.

The higher fund mobilisation in 2021 versus 2022 can be attributed to a couple of key factors. The primary reason was conducive broader capital market conditions with a steep bullish streak through most of 2021 coupled with euphoric investor sentiments. Moreover, key market-cap indices ended the calendar with relatively high double-digit returns, Karkera said.