The mutual fund industry is eyeing a four-fold rise in AUM to Rs 100 lakh crore from existing Rs 25 lakh crore and increase in investor base to 10 crore from current 2 crore over the next decade, according to AMFI-BCG vision document.
The document, targeting penetration in B30 (beyond the top) cities, was released in Mumbai in the presence of Sebi Chairman Ajay Tyagi and mutual fund industry officials.
Diversifying the distribution outreach by leveraging the wide network of banks, post offices across the country, significantly augmenting the distribution base by another 4 lakhs, strengthening direct and digital channels and offering simple savings solutions would be key to Indian mutual fund industry adding 80 million new investors and accomplishing the Rs 100 lakh crore Assets Under Management (AUM) opportunity, AMFI said.
Speaking on the release of document, Sebi chairman Ajay Tyagi said, "I complement the role played by each of the Indian Mutual Fund (MF) players towards the growth of the industry. This has also led to mutual funds becoming the preferred mode of investment and helping in financialization of household savings."
Indian MF (mutual fund) industry has a long way to go in terms of reaching out to investors across the country and it is now imperative for each segment within the MF houses to be proactive in exercising self-restraint, have better self-regulation and ensure better risk management to take the MF industry to the next level of growth and development, he said.
According to the latest edition of the AMFI-CRISIL fact book, between April 2016 when the Association of Mutual Funds in India (AMFI) started disclosing monthly SIP contributions and July 2019, the SIP (systematic investment plans) mode has helped rake in a significant 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, AMFI said.
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This is also reflective of almost three times growth in the number of SIP accounts to 27.3 million from 10 million over this period, the release said.
Besides, annual contribution through SIP witnessed increase in contribution by individual investors from Rs 44,000 crore in fiscal 2016-17 to nearly Rs 93,000 crore in 2018-19.
"It is indeed heartening to note that Indians are increasingly moving away from physical savings to financial savings. However, the realization 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," AMFI Chief Executive N S Venkatesh said.
While AMFI's investor awareness campaign, Mutual Funds Sahi Hai', is a step in that direction and has met with encouraging success, industry is preparing for a concerted strategy that would over time help the saver community across the country to gradually depart from traditional and financially-inferior ingrained attitudes and habits, he added.
The MF industry added 44.2 million 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 (compound annual growth rate) of 15.5 per cent over this period, AMFI said.
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 AUM 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, it said.
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.
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