MFs added Rs 3.15 trn to asset base in 2019 on debt schemes, Sebi measures

The AUM of the industry rose by over 13 per cent to Rs 26.77 trillion

Mutual funds have added a whopping Rs 3.15 trillion to their asset base in 2019 on the back of robust inflows in debt schemes and measures taken by regulator Sebi for boosting investor confidence.

The asset under management (AUM) of the industry rose by over 13 per cent (Rs 3.15 trillion) to Rs 26.77 trillion at the end of last month, up from Rs 23.62 trillion at the end of December 2018, as per the latest data available with the Association of Mutual Funds in India (Amfi).

The AUM growth seen by the 44-member mutual fund industry in 2019 is significantly higher than 7.5 per cent witnessed in 2018. However, the growth was much more higher at 32 per cent in 2017, when the asset base expanded by over Rs 5.4 trillion.

Industry experts said the double-digit growth is a positive sign given the negative sentiment about equity and fixed income securities. This growth should be primarily credited to inflows in debt-oriented schemes, steps taken by Sebi that boosted investor confidence, and to distributors for helping take the message of "mutual fund sahi hai" (mutual funds are right) to every nook and corner of the country.

"Growth we now see in AUM is largely attributed to debt-oriented schemes. The inflows in debt-oriented schemes have been surprisingly high and saved the year 2019 from becoming a 'dark-dull year of investing', as the year saw Sensex at its record high, investors chose to book profits and drew themselves away from all the negative aura that was around markets.

"While SIP (Systematic Investment Plan) inflows were impressive with around Rs 8,000-crore-plus, the overall equity excitement was missing. The positive side to this is that investors have not lost their complete faith in equity investments and trust the process of SIP," Quantum Mutual Fund CEO Jimmy Patel said.

The year 2019 marks the seventh consecutive yearly rise in the industry AUM after a drop during the two preceding years. The AUM of the industry has grown from Rs 8.22 trillion in November 2009 to Rs 27 trillion in November 2019, indicating an over three-fold jump in 10 years.

The year has also seen repayment issues and downgrades with certain companies, which affected investor sentiment. However, this has also resulted in investors becoming more aware about the overall risk involved with different categories of mutual funds and now choose funds based on their risk appetite.

In terms of asset size, HDFC MF continued to lead the pack with an AUM of Rs 3,82,517 crore (excluding fund of funds) at the end of December 2019, followed by ICICI Prudential MF (Rs 3,61,506 crore) and SBI MF (Rs 3,52,632 crore).

Going ahead, Patel said 2020 will be the year of SIPs, which will rule over lumpsum investments and millennials will start investing in mutual funds.

"If the regulatory framework and the supportive infrastructure is conducive there may be investment by mutual funds in commodities. Overall in my view one could expect a marginal growth in the year 2020. However, mutual fund as an avenue for investment is here to stay," he added.