Mutual Fund News

July 14, 2025July 14, 2025 admin 0 Comments AI ML in markets, AIFs mutual funds, algorithmic trading, Bandhan MF, Capitalmind MF, Debt funds, equity MF outflows, Financial Intermediation, fintech regulation, Flexi Cap Fund, Franklin Templeton, IA RA regulations, Indian equities, Indian mutual fund growth, investor protection, mutual fund inflows, NSE co-location scam, Operation Sindoor, OPG Securities, repo rate cut, SEBI, Sebi AI guidelines, SEBI compliance, SEBI SIF scheme, SIP growth, Uday Kotak

Sebi Demands Rs 5.35 Cr from OPG Securities in NSE Colo Case

The Securities and Exchange Board of India (Sebi) has issued recovery notices to OPG Securities and its directors—Sanjay Gupta, Sangeeta Gupta, and Om Prakash Gupta—demanding payment of Rs 5.35 crore within 15 days in connection with the NSE co-location scam. The demand includes penalties and interest, following Sebi’s April 2025 order which found them guilty of unfair access to NSE’s secondary market servers. Sebi warned of stringent recovery actions, including attachment of properties, bank accounts, and even arrest in case of non-payment. The case is part of a long-running regulatory probe into the abuse of NSE’s co-location facility by select brokers to gain early access to trade data and execute faster trades, giving them an unfair advantage. Sebi has maintained a strict stance on the misuse of market infrastructure to preserve transparency and investor trust in the system.

Falling Bank Deposit Rates Drive Surge in Mutual Fund Inflows

The recent 50 basis point cut in repo rate to 5.5% is expected to lower bank deposit rates, prompting more investors to shift towards mutual funds, especially debt and hybrid funds. Systematic Investment Plans (SIPs) in equity mutual funds have already gained popularity, with inflows reaching Rs 24,269 crore in April and SIP contributions rising 31% year-on-year to Rs 26,632 crore. SIP AUM also surged 23% to Rs 13.9 lakh crore. With banks likely to reduce FD rates further due to excess liquidity, retail and institutional investors are seeking better returns in mutual funds. Experts say debt funds and hybrid schemes will benefit most from the trend. SBI Mutual Fund and ITI Mutual Fund executives highlighted that this rate environment, combined with supportive RBI policies, could also revive credit growth and sustain equity market momentum, further strengthening the mutual fund sector’s appeal.

MF AUM Surge Signals Major Shift in Investor Behaviour: Uday Kotak

The share of mutual fund assets under management (AUM)—primarily equity funds—has doubled to 31% of bank deposits post-Covid, highlighting a fundamental change in India’s financial intermediation, noted Uday Kotak, Founder and Director of Kotak Mahindra Bank. Posting on platform X, Kotak stated, “India’s saver turns investor… Reflects structural change in financial intermediation. It grows domestic risk capital and creates an equity culture. But let’s be alert about excessive exuberance.” He shared data showing mutual fund AUM as a percentage of bank deposits rose from 13% in FY15 to 29% in FY25. The shift signals rising investor preference for market-linked instruments over traditional fixed deposits, suggesting a maturing financial ecosystem in India. The change also supports capital market development by channeling household savings into equity, while reinforcing the need for investor caution amid market exuberance.

Sebi Permits Liquid and Overnight MFs for IA, RA Deposit Compliance

In a move to ease compliance and operational difficulties, Sebi has allowed Investment Advisers (IAs) and Research Analysts (RAs) to use liquid mutual funds and overnight funds to meet their mandatory deposit requirements. Earlier, the norm required a fixed deposit lien-marked to the Administration and Supervisory Body (ASB) with a scheduled bank. However, IAs and RAs raised concerns over inconsistent implementation of third-party FD procedures and challenges in lien marking. Responding to these issues, Sebi has now permitted units of liquid or overnight mutual funds, lien-marked in favour of ASB, as valid instruments. This flexibility aims to simplify regulatory adherence and enhance ease of doing business for market intermediaries, offering more practical options for maintaining regulatory deposits. The measure is expected to reduce procedural friction and better align with the dynamic investment practices of professionals in the advisory ecosystem.

Indian MF Industry Delivers 20% CAGR Growth Over a Decade: Franklin Templeton

India’s mutual fund industry has experienced robust expansion, clocking a 20% CAGR over the past 10 years and a striking 24% CAGR over the last five years, according to Franklin Templeton India Mutual Fund. As of May 2025, the industry’s AUM reached a record Rs 72.2 lakh crore, marking an annual addition of Rs 13.3 lakh crore. In comparison, US mutual fund assets grew at a more modest 8% CAGR over the past decade. The Indian MF sector has emerged as a counterweight to foreign institutional investor (FII) movements, with domestic institutional investors (DIIs) netting Rs 6 lakh crore in the past year despite Rs 3.1 lakh crore FPI outflows. MF AUM now stands at 31% of bank deposits, tripling from 12.6% in 2015. Moreover, investor participation from B15 and B30 cities has risen steadily, indicating deepening retail penetration across India.

Global Tensions Drag Equity MF Inflows Down 22% in May

Net inflows into equity mutual funds in India dropped sharply by 21.66% month-on-month to Rs 19,013 crore in May 2025 from Rs 24,269 crore in April, impacted by global market volatility and geopolitical tensions, including India’s Operation Sindoor. Compared to May 2024, the decline was a steeper 45.20%. Net inflows into domestic ETFs (excluding gold ETFs) also plunged 78.55% month-on-month, following a record Rs 19,057 crore in April. Despite the short-term decline, overall industry AUM grew by 22.55% year-on-year to Rs 72.2 trillion in May 2025. Open-ended growth and equity-oriented schemes posted the highest YoY AUM growth at 26.21%, followed by other open-ended schemes (24.45%) and hybrid schemes (22.12%). These trends, highlighted by AMFI and ICRA Analytics, indicate temporary investor caution in equities amid uncertainty, even as the broader MF industry maintains a strong long-term growth trajectory.

Capitalmind MF Files for First Fund; Flexi Cap Scheme in the Works

Capitalmind Mutual Fund, founded by Deepak Shenoy, has filed its first draft offer document with SEBI for the launch of Capitalmind Flexi Cap Fund. This will be an open-ended equity scheme with the flexibility to invest across large-cap, mid-cap, and small-cap segments. The scheme’s objective is long-term capital appreciation through diversified equity exposure and will be benchmarked against the NIFTY 500 TRI. Managed by Anoop Vijaykumar, the fund will offer both regular and direct plans with a growth option. An exit load of 1% will apply if units are redeemed within 12 months; beyond that, no exit load will be charged.

Wealth Managers, AIFs Eye Mutual Fund Entry Amid SEBI’s SIF Push

India’s mutual fund landscape is witnessing heightened interest from alternative investment funds (AIFs) and wealth managers as SEBI encourages the entry of new players through its Special Incentive Framework (SIF). As of March 31, 2025, five entities—AlphaGrep Securities, Monarch Networth Capital, Marcellus Investment Managers, Wealth First Portfolio Managers, and Nuvama Wealth—have pending in-principle approvals. AlphaGrep has already received SEBI’s initial nod. Earlier, firms like Jio Financial Services, Blackrock, Pantomath Capital, and Capitalmind Financial Services were granted licenses, with final registration pending. The trend signals a broadening of the industry, which currently has 46 asset management companies.

Indian Equities Lead Global Charts with 16% Return in 3 Months: Bandhan MF

India outpaced global equity markets in the three months ending May 2025, delivering an impressive 16% return, making it the best-performing market worldwide, according to Bandhan Mutual Fund’s Monthly Market Outlook. This performance sharply contrasted with emerging markets, which posted 5% gains, while world and developed market indices rose just 2%.

Over a five-year horizon, Indian equities continued their dominance with an 18% annualised US dollar return, outperforming global and developed markets (12%) and delivering over four times the return of emerging markets. Since the market low of March 2020, India’s outperformance remains consistent.

Among global markets, China was the laggard in May, falling 2%. Within Indian equities, small-cap stocks led across all timeframes—3 months, 5 years, and since March 2020—followed by mid-caps and then large-caps.

Sebi Proposes AI-ML Guidelines to Regulate Tech Use in Securities Market

The Securities and Exchange Board of India (Sebi) is preparing to integrate artificial intelligence and machine learning (AI/ML) into market operations with a structured regulatory approach. In a newly released consultation paper titled ‘Guidelines for Responsible Usage of AI/ML in the Indian Securities Market’, Sebi has outlined a five-point framework to ensure safe and ethical deployment of these technologies.

The proposed framework covers: model governance, investor protection and disclosures, testing mechanisms, fairness and bias mitigation, and data privacy along with cybersecurity safeguards. These measures aim to address the potential risks of algorithmic bias, data misuse, and operational opacity.

The consultation follows inputs from a dedicated working group of AI/ML experts, who stressed the need for ethical innovation in financial markets. The move reflects Sebi’s proactive stance in balancing technological advancement with investor interests and market stability.