This Is Just A Start For The MF Industry
Mutual fund industry could see quantum leap in AUM growth in the coming years backed by rising inflows from B-15 towns
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The mutual fund industry has tripled its AUMs in the last five years and the future for the MF industry is beginning to look more promising than ever.
Expressing confidence on the future of the mutual fund industry, SEBI's whole time director, G Mahalingam noted that "the MF industry is just at the start of a journey and not at the end. This is going to provide us a huge impetus for growth in the coming years in the mutual fund industry," he said.
He was speaking at the launch of the new investor awareness campaign by the Association of Mutual Funds India with a new the message - Mutual Funds Sahi Hai.
He, however, called more investor awareness participation from mutual funds and media houses. G Mahalingam also sounded out that the industry must work hard to retain this growth and the industry cannot afford to sit on the past and growth and will have to put in more efforts to sustain this growth.
In the last five years, the AUMs in the mutual fund industry has nearly tripled. Attributing to the sharp growth in the AUMs as a collective effort of the mutual fund industry, G Mahalingam noted that perhaps no other industry could have managed such a growth collectively.
Speaking of the better macro-economic conditions that fosters savings, G Mahalingam said "If we look at the country's macro-economic fundamentals today, we are at a great opportunity. The country's GDP growth has been closing in on 7.1. If you look at the broad trajectory in inflation, we have not beaten the problem, but we have kept the problem under control." He also commented that a tertiary look at the economic fundamentals "all of us can heave a sigh of relief that the industry is on a robust growth."
On the increasing savings options of the retail investor, G Mahalingam noted that the compared to bank deposits, mutual funds have been continuously increasing in size. Bank deposits are at about Rs 106 lakh crore as compared to mutual funds at about Rs 17.8 crore. "We are at about 1/6th of bank deposits. In 2012, the ratio would have been 2012 around a tenth, and we can be satisfied," he said.
G Mahalingam also indicated that the division of B15 towns has increased savings of people in mutual funds and is weaning away from gold in the smaller towns and cities. "The B15 - T15 division brings about savings from those corners of the country which were being traditionally put in gold," he said.
B-15 towns also provide sustainability to the inflows in the MF industry. "One thing from sure, more and more funds coming from the retail investors, lends strength to the mutual fund overall. It's not fluid funds, but absolutely solid funds that people are going to repose their faith in."
Speaking on the campaign launched by AMFI, Mahalingam noted that it is a fantastic campaign. "We don't say much, but we have said everything that we can. It carries the message across very well," he said.
A Balasubramanian, AMFI Chairman, highlighted that MF AUMS will surge to much higher levels in the coming five years. "Indian mutual funds are at an inflection point," he said.
Noting that the under-penetration in the Indian economy of mutual funds is low, Balasubramanian, said that next level of growth will be substantially higher than the last five years.
The CEO of Birla Sunlife MF also indicated that the industry has been receiving about Rs 1 lakh as inflow in equity, noting that the equity folios have increased from 3.26 crore in 2014 to about 4.44 crore in 2017. "The efforts of the Indian mutual fund industry to encourage equity as financial savings has yielded results," said Balasubramanian.
Indicating that Systematic Investment Plans have met with a huge investor response, the collective efforts of the industry has seen contributed significantly to the increasing penetration of SIPs. "Today the average ticket size is gone to Rs 3750. About Rs 4200 crores comes from SIPs, which almost constitutes about 50% of the gross flows," said Balasubramanian.
Commenting on AMFI's investor awareness program Balasubramanian said that the new campaigns would go on for three months, requesting the mutual fund houses to collectively use the new campaign.