MF retail assets crossing Rs 10 trn a big achievement: Amfi's N S Venkatesh

The retail segment of the Rs23-trillion mutual fund (MF) industry is growing at a much faster clip. N S Venkatesh, chief executive of the Association of Mutual Funds in India (Amfi), talks to Jash Kriplani on the latest milestones. Edited excerpts:

What are the key trends from July numbers?

For the first time, retail assets have crossed Rs10 trillion, a big milestone for the MF industry. In the past year, while assets under management (AUM) of the overall industry have grown 17 per cent, that in the retail segment was double at 34 per cent. Retail AUM had touched Rs5 trillion in July 2016. Within two years, it has doubled. Also, the number of folios has gone up 16 million in one year, to 75.4 million at the end of July. Another interesting trend is that the number of folios has increased for 50 consecutive months, irrespective of market conditions. This is truly a great achievement. 

Reasons behind the growth in the retail segment? 

There are number of reasons. The awareness campaign carried out by Amfi was one. The ‘mutual fund sahi hai’ campaign has been a huge success and caught the fancy of retail investors. Also, the secondary markets have been performing well. Systematic Investment Plan (SIP) as a concept has picked up very well. SIPs were 6.2 million at the end of March 2014 and folio count had risen nearly four times to 22.8 million at the end of June. SIPs have helped channel retail flows into the equity market. Most SIPs are in the equity segment.

Reasons behind huge net outflow in July?

Overall, the net outflows was Rs326 billion in July, despite higher gross sales compared to the preceding month. The outflows are mainly due to withdrawals from liquid funds. All equity sub-categories such as balanced, arbitrage and pure equity have seen net inflow. So, despite all the volatility, net inflow for equity continues to remain positive. Outflow from the debt segment could be on account of hardening of bond yields. 

Also, some investors might have taken out money, anticipating a rate hike at the Reserve Bank of India’s policy meeting on August 2.

The outlook for the next one year?

I believe the equity and SIPs flow will continue. Currently, SIPs are contributing Rs 75 billion a month. We don’t see any major hiccups there. The industry has matured. With economic and earnings growth picking up, the markets should maintain at current levels or higher. If that’s the case, the growth rate seen in the past year should continue. So, the overall industry could continue to grow at 18 per cent and the retail segment at over 30 per cent.