The mutual fund (MF) industry is eyeing four-fold rise in Assets Under Management (AUMs) to Rs 100 lakh crore from existing Rs 25 lakh crore, and a five-fold rise in investor base to 10 crore from present 2 crore over the next decade. According to the AMFI-BCG Vision Document, the industry is aspiring to achieve huge geographic penetration in B30 cities, where nearly 90 per cent of Indian households reside.
The AMFI BCG Vision Document for the mutual fund industry, and AMFI CRISIL Mutual Fund Fact book, puts forth the key trends in the MF sector, in the presence of regulatory and MF industry officials.
Ajay Tyagi, Chairman, Sebi, said, “I complement the role played by each of the Indian MF players towards the growth of the industry. This has also led to MFs in becoming the preferred mode of Investment and helping in financialisation of household savings.”
Diversifying the distribution outreach by leveraging the wide network of banks, post offices, significantly augmenting the distribution base by another 4 lakh, strengthening direct and digital channels, thus ensuring the last-mile connectivity and achieving inclusion through tech-led simplified entry-level on-boarding and offering simple savings solutions, would be key to mutual funds industry adding 8 crore new investors and accomplishing the Rs 100 lakh crore AUM mark.
Nimesh Shah, Chairman, AMFI, said, “The Rs 100 lakh crore MF AUM opportunity would ride on the government’s ambitious objective of transforming India into a $ 5 trillion economy, which is also now increasingly finding rising global resonance and support, in addition to inherent robust self-propelled growth prospects.”
N S Venkatesh, Chief Executive, AMFI, said, “It is indeed heartening to note that Indians are increasingly moving away from physical savings to financial savings. However, the realisation that to beat inflation they will have to change from traditional saving options to equities and mutual funds is happening at a much slower pace.”
According to the latest edition of the AMFI-CRISIL Fact Book, between April 2016 and July 2019, the SIP mode has helped rake in a whopping Rs 2.30 lakh crore, nearly 23 per cent of the increase of Rs 10 lakh crore in assets under management (AUM) of the industry. This is also reflective of almost 3 times growth in the number of SIP accounts to 2.73 crore from 1 crore over this period.
Venkatesh goes on to explain while AMFI’s investor awareness campaign, ‘Mutual Funds Sahi Hai’, is a step in that direction and has met with encouraging success, a concerted strategy would help the saver community to gradually depart from traditional and financially-inferior ingrained attitudes and habits.
Annual contribution through SIP witnessed a progressive rise in the contribution by individual investors from Rs 44,000 crore (FY 2016-17) to Rs 93,000 crore (FY 2018-19). During the first quarter of fiscal 2019-20, the surge in SIPs continued to nearly Rs 25,000 crore. This reinforces the investors’ belief and trust in SIPs, and are now seen aligning to the fact that probability of negative returns decreases with increase in SIP investment period.
The MF industry added 4.42 crore folios between March 2014 and June 2019. Almost the entire growth in folios came from the individual investors segment (retail and HNI), which logged a CAGR of 15.5 per cent over this period. The average ticket size of institutional investor folios more than doubled from Rs 1.15 crore in March 2014 to Rs 2.31 crore in June 2019.
On the back of consistent increase in individual participation in MFs, the AUMs of individual investors saw a 27 per cent rise to Rs 14 lakh crore in June 2019, from Rs 4 lakh crore in March 2014, taking the individual share to 58 per cent of AUM. The AUM of institutional investors, on the other hand logged a slower 18.1 per cent rise to Rs 10.2 lakh crore, from Rs 4.3 lakh crore during the same period.