Mutual fund industry may touch Rs 20 lakh cr sooner than expected: Experts

AUM of mutual fund industry touched Rs 16.93 lakh crore at end of quarter October-December 2016

With lower bank interest rates and demonetisation, the assets under management (AUM) of the Indian mutual fund industry are expected to touch Rs 20 lakh crore sooner than expected, said industry experts.

The AUM of the mutual fund industry touched Rs 16.93 lakh crore at the end of quarter October-December 2016, up from Rs 16.10 lakh crore at the end of the previous quarter July-September 2016.

The industry added Rs 82,610 crore to its kitty during the third quarter of the current fiscal, as per industry numbers.

However the next two months would be crucial as the central government would present its annual budget.

"As more and more money enters the banking system, we see a clear surge in investments within capital markets, especially MF (mutual funds) and debt instruments. We are quite confident of the MF industry touching Rs 20 lakh crore sooner than expected," said Sundeep Sikka, Executive Director and CEO, Reliance Nippon Life Asset Management Ltd (Reliance Mutual Fund).

Agreeing with him, Parag Parikh Financial Advisory Services Pvt Ltd-sponsored Mutual Funds' CEO Neil Parag Parikh told IANS: "We are seeing people excited in putting money into mutual fund. The uptrend will happen next year as people generally invest in mutual funds when the markets come down."

"While it is difficult to hazard a guess as to when the industry would touch the milestone of Rs.20 lakh crore, it may happen sooner than expected. May be in two or three year's time," he added.

According to Parikh, the next two months would be crucial as the full impact of the demonetisation would be experienced since till December 2016, the old high value currencies were allowed to be used.

"One has to wait and see as to how the demonetisation would affect the economy and its different sectors. One should also wait to see the US policies under Trump," he added.

Meanwhile, last quarter ICICI Prudential Mutual Fund continued to be at the top spot with an AUM of Rs 227,989 crore and is followed by HDFC Mutual Fund with Rs 221,825 crore and Reliance Mutual Fund with Rs 195,845 crore.

Going by the industry numbers, Reliance Mutual Fund logged the highest sum in terms of accretion to its AUM during the third quarter at Rs.12,717 crore followed by ICICI Prudential with Rs 12,003 crore.