Mutual fund AUMs to cross Rs 20 trillion mark by 2018: report

Says faster growth is backed by factors like sound macro-economic environment and favourable demographics

Total assets under management (AUMs) of Mutual Fund industry are expected to cross Rs 20 trillion mark by 2018 from the existing Rs 12 trillion, according to a report.

Faster growth is backed by factors like sound macro-economic environment and favourable demographics, according to a joint report by EY and Cafemutual.

While the domestic MF industry has outpaced global mutual funds in terms of AUM growth, there lies a significant opportunity to channelise household savings, which are only at Rs 11.7 trillion, into capital markets, it said.

Since 2008, mutual funds' AUMs have grown at a CAGR of 16.84%, outpacing the global average of around 8.80% by double the rate.

Basing its optimism on the favourable demographics, the report said a growing young population is expected to increase the number of MF investors.

"There is a lot of positive feeling about the domestic mutual fund industry and we are on the right trajectory from a long term perspective," EY partner Murali Balaraman told PTI.

However, he cautioned that despite a high savings rate of 30.6% of GDP, the percentage of mutual funds is a mere 7, which is very low.

Citing the reasons for this, the report said there is a preference for less risky investment products which was coupled with lack of financial literacy among households and limited development of various distribution channels.

"Going by the low share of households investing in MFs, the industry is still waiting for its takeoff," Cafemutual founder Prem Khatri said.