Mutual funds add Rs 5 trn to kitty in 2017; AUM crosses Rs 22-trn mark

Mutual fund industry saw its assets base jump to over Rs 22 trillion in 2017, adding more than Rs 5.4 trillion to the kitty, on strong participation from retail investors and investor awareness initiatives.

Moreover, fund houses are expecting similar 'healthy' growth in AUM to continue in the new year too as the penetration levels of mutual funds are still very low in the country.

Total AUM of all the fund houses put together soared by over Rs 5.4 trillion, or 32 per cent, to Rs 22.35 trillion at the end of December 2017 from Rs 16.93 trillion in December-end 2016, latest update with Association of Mutual Funds in India (Amfi) noted.

This was the fifth consecutive yearly rise in the industry AUM, after a drop in the assets base for two preceding years.

Out of the 42 active fund houses, two mutual funds have not disclosed the assets under management (AUM) data at the end of December 2017.

Further, barring Taurus MF, all the fund houses have registered a rise in their respective AUMs during the period under review.

The spike in bank deposits and consequent decline in interest rates following demonetisation on November 8, 2016 have helped mutual funds.

Besides, Amfi Chairman A Balasubramanian attributed the impressive surge in assets base to 'aggressive' investor awareness campaign both at the individual players' level as well as at an industry level.

"The 'Mutual Fund Sahi Hai' campaign has created huge impact in building confidence among investors. Mutual fund distributors too have played a key role in connecting with their existing and new customers. It is also believed that investors are no more interested in buying into traditional asset classes such as real estate and gold thus moving to financial asset class," he added.

"Demonetisation effect, decline in interest rate on traditional assured returns product like fixed deposit, shift from physical to financial savings as real estate and gold were lack lustre and increasing initiatives on enhancing investor awareness have all aided in such impressive growth in the industry," Franklin Templeton Investments India President Sanjay Sapre said.

Moreover, a sharp rise in systematic investment plans (SIPs) promoted more sustainable growth for the industry as more people moved away from the concept of large lump sum investments.

Among the top five players, ICICI Prudential MF led the pack with asset base of Rs 2.9 trillion (excluding Fund of Funds) followed by HDFC MF (2.8 trillion), Reliance MF (Rs 2.4 trillion), Aditya Birla Sun Life MF (Rs 2.4 trillion) and SBI MF (Rs 2.05 trillion).

In terms of yearly rise in AUM, Motilal Oswal MF saw maximum growth of 121 per cent to Rs 157 billion in asset base, followed by Mirae Asset MF (112 per cent to Rs 134 billion) L&T MF (71 per cent to Rs 603 billion), Axis MF (49 per cent to Rs 733 billion) and DSP Black Rock MF (48 per cent to Rs 862 billion).

Going ahead, Sapre said, "low penetration of mutual funds in India is one of the key factors which will drive growth, coupled with increasing levels of financial literacy and lack of suitable alternatives for long term wealth creation".

"Further, technology is likely to be a key enabler of growth to deepen reach and build scale using the trinity of Jandhan, Aadhaar and the Mobile (JAM) for everything from KYC to payments. This will not only help improve distribution reach across the country but will also reduce costs and improves ease of investing," he added.