Mutual Fund Equity Assets Rebound Near Record Highs Despite Investment Dip:

Suspense crime, Digital Desk : Following a decrease in mutual fund investments over the prior quarter, their equity assets under custody (AUC) have remarkably surged, nearing figures not observed since September 2024. This recuperation is linked very closely with the surge of the Indian equity markets.

The AUC of mutual funds reached a staggering ₹43.74 lakh crore by April 2025, marking an 11.55% increase from the ₹39.21 lakh crore nadir in February. That was the lowest figure recorded over a nine-month span. In addition, mutual funds now account for 10.33% of total equity and fund AUM ownership, which is also a new positive record. September 2024 took the record for the AUC, standing at ₹44.16 lakh crore.

This growth in AUC is striking given the drastic decrease in equity investments by mutual funds. Average monthly equity inflows during March and April plummeted to ₹15,000 crore, significantly lower than the past year’s monthly average of ₹39,000 crore.

Fund managers are optimistic in the short-term but the current data depicts a more pessimistic approach, according to Analyst Deepak Jasani. Many have elevated cash levels, meaning they do not fully deploy capital due to anxiety over market valuation. It appears they are looking for more favorable entry points.

“I expect equities to remain range bound until the next triggers of earnings season where we will see a sharp jump. In April some period marks the zeroth of April mat leave. Unallocated cash positions that prop did lead to tighter mark to market right as the falsely wore off when the peak faded was in mid March towards the highly CP bias,” he said.

Mutual funds’ cash positions rose in April to ₹1.52 lakh crore, from ₹1.46 lakh crore in February.

The AUC spike alongside an increase in the stock market starting from mid-April. This was after the U.S. President Donald Trump paused tariffs for some countries and renewed interest from international investors.

Alongside this, important metrics such as Sensex and Nifty are up to more than 11%. The BSE MidCap and SmallCap indices experienced a more than 14 and 16 percent increase in value, respectively.

As quoted in the Economic Times, expert Deven Choksey stated the Deven Choksey FinServ believes the investment slowdown is partially caused by the start of a new fiscal year, a time that tends to limit spending. He cited ongoing global uncertainties as tariffs, geopolitical risks, and potential redemptions as reason for limited investment decisions.