The mutual funds are back with a bang.
The average assets under management (AAUM) of the Indian mutual fund industry reached an all-time high of INR 19.11 lakh crores in April 2017. The data has been released by the Association of Mutual Funds (AMFI), an industry standards organization in the mutual fund sector of India. This reveals a six-fold increase in a span of mere 10 years.
Indian mutual funds industry
The Indian mutual funds industry had recorded a corpus of INR 3.26 lakh crores on March 2007, which has grown into the grand total of INR 19.26 lakh crores as on 30th April 2017. further the industry crossed various milestones in touching this figure. Such as the milestone of 10 lakh crores in investment crossed in May 2014.
Furthermore, the total number of accounts under management as on 30th April 2017 were 5.61 crores. Of these, the number of folios under Equity, Equity-linked savings scheme (ELSS) and balanced schemes took the cake with 4.51 crores accounts. The retail segment of the Equity and its related instruments were the favorite among the investors.
Reasons for the boost
This boost that the economy has seen has a number of reasons. And the reasons range from strengthening of the economy in recent times to the bullish sentiment of the investors. The foreign investments too, have featured prominently in this rise. Also, worth noting are the efforts of AMFI in the process.
To begin with, AMFI started out in the August of 1995 to improve ethical and professional standards in the mutual funds industry of India. It stressed on the need for transparency in the sector and on educating the investor. The AMFI tagged the banks along and advised them to run workshops to enlighten the investors. One of such program was dubbed as the AMFI Investor Awareness Programme (AMFI IAP).
Furthermore, the visible component of this campaign can be seen in the advertisements on mutual funds across the mass media. These advertisements highlight the risky nature of mutual fund investments and how to screen them. Also, these programs and such have gone a long way in improving buyer confidence in the sector. Now, with disposable income to splurge, thanks to these awareness campaigns, the investors have turned their attention towards mutual funds.
This is evidenced by a report released by AMFI in February 2017 that said the equity funds had received a net inflow of INR 5,465 crores till then. Most of this income has come from pure equity funds and not from arbitrage. The SIPs (Systematic Investment Plans) too showed positive movement in the time period in question.
The SIPs recorded an influx of INR 4300 crores. Encouragingly, 99% of this inflow has been the equity category. The SIPs average an inflow of INR 4,000 crores every month. This sustained inflow has helped equity funds to reach INR 55,000 crores net inflow year to date (YTD).The AMFI data for the month of January 2017 revealed that mutual fund SIP accounts now stood at a total of 1.28 crores.
Moreover, the industry on an average has been adding 6.86 lakh SIP accounts each month to its corpus. If we take into account the inflow of INR 4562 crores of the balanced funds, INR 997 crores of the ELSS and INR 930 crores of the equity ETFs (Exchange Traded funds), the combined inflow in equity category till February 2017 comes close to INR 12,000 crores.
So, the above data corroborates enough the investor sentiments and the changing paradigm. It also reveals a change in perspective of the investors of today. For the investors now eye equity funds as a long-term asset class to fetch better returns.