Rise of 15% in AUM of Sticky Funds

There is an improvement in the AUM share of sticky long term funds. The rise in the AUM has recorded to increase by 15% to $74.6 billion. In April and May, the AUM of FPIs in which the sovereign governments hold over 75% stakes surged by 6% to INR 1.4 lakh crore.

There is an increase of 14.2% to INR 1.5 lakh crore in the AUM of the sovereign wealth funds. India is emerging as an attractive destination for sticky foreign investors including global pension funds, sovereign wealth funds, central banks, and government-owned agencies. 

These are given the term sticky just because of the long term investment terms. This is beneficial for the country as it helps to increase the market depth which causes a reduction in the redemption pressure in times of high volatility. 

As per the data from NSDL, AUM data has surged by 490 points in the previous two years. The share of AUM of the sticky funds in the total AUM of for foreign portfolio investors (FPIs) in India rose to 23% in May 2020 from 21.1% in December 2019.

AUM of sticky funds rose by 15% to Rs 5.6 lakh crore ($ 74.6 billion) in the two months to May. The growth was faster than the 4% increase in the total AUM worth Rs 24.3 lakh crore ($ 324 billion) of foreign portfolio investors (FPIs) in India. The total AUM of FPIs forms one-fifth of the country’s total market cap of Rs 138 lakh crore ($ 1.8 trillion).

The highest surge in AUM is recorded in the global university endowment funds in which the AUM had doubled to INR 13,367 crore in 2 months to May and 2.3% of the sticky fund flow. 

Endowment funds of universities consist of money received from donors and alumni. Their investment income is used to run the respective universities on a long-term sustainable basis.

After the withdrawal of INR 67,500 crore in March and April the FPIs had bought INR 36,000 crore worth Indian equities in May and June.