MF industry looks to ramp up investor base to 9 cr in 5 years

The mutual fund industry is looking at increasing its investor base to 9 crore from 2 crore at present in the next five years and hopes that demonetisation will boost flow of capital and get new investors on board.

According to an industry estimate, of the 120 crore population, merely 2 crore are investing in mutual funds currently. The industry, comprising 40 fund houses, is looking to make it to 9 crore over 3-5 years.

Around 20 fund houses in the country are steeped in losses.

Of 2 crore people who have invested in MF products, 1.08 crore have put their money in systematic investment plans.
 

"Our study says there are nine crore people living in the country with investment surplus and currently, merely 2 crore of them are investing in mutual fund products. We are looking to make it to 9 crore over 3-5 years," Association of Mutual Funds of India Chief Executive CVR Rajendran said.

He was speaking to reporters on the sidelines of an event organised by DSP Blackrock Investment Managers here.

"It is estimated that there will be a cash flow to the tune of Rs 7 trillion to the banking system due to the ongoing demonetisation move and the mutual fund industry will definitely get a significant chunk of this flow in due course," he said.

"While banks with huge deposits will be investing in fund houses of their own, the retail investors will also put their money in the equity funds in hope of getting better returns."

Total asset under management has gone up to Rs 17 trillion from Rs 11 trillion over the past one and a half years, an increase of around 50 per cent. "Hence, we do hope that the current AUM will be doubled over the next three years," he said.

According to Rajendran, the industry will be spending Rs 320 crore on investor awareness programmes in the current fiscal and half of this money will be spent by AMFI alone.

While 93 per cent of MF products have given an annualised return of 15 per cent over the past 10 years, the returns on an average are 2 per cent over the inflation rates, he said.

Demonetisation and how the industry can benefit by it were elaborately discussed during the monthly board meeting of AMFI here yesterday, Rajendran said.