Eyeing Rs 100 trn AUM, 100 mn investors by 2030 for mutual funds: Amfi CEO

The mutual fund (MF) industry has achieved scale in recent years but there is still a long runway for growth, says Venkat Nageswar Chalasani in an interview with Abhishek Kumar

The mutual fund (MF) industry has achieved scale in recent years but there is still a long runway for growth, says Venkat Nageswar Chalasani, new chief executive of the Association of Mutual Funds in India (Amfi) in an interview with Abhishek Kumar in Mumbai. Chalasani says the association is working to revive interest in debt funds and boost the distribution network. Edited excerpts:

You are taking over as CEO at a time when the industry is in one of its best phases so far. How do you plan to propel the growth further?

Growth will depend on how the economy and companies perform and the pace at which the industry adds new investors. Looking at various tailwinds for economic growth, the market should continue to be supportive. On the investor addition front, there’s a long runway for growth. The MF assets under management (AUM) is still one-fourth of the total bank deposits. Going forward, the idea is to try and educate more people and turn them from savers to investors. Focus will be on enhancing awareness around MFs and also the risks involved. This is crucial from both investor additions as well as retention point of view. MF distributors remain the most important arm of the entire ecosystem and we will look to boost the network, while also putting a greater emphasis on their training.

Have you set any target for the industry? By when do you see the AUM going past the Rs 100 trillion milestone?

At the current pace, the industry should achieve Rs 100 trillion AUM in 2029 or 2030. In the next five years, the aim is to take the unique investor count past the 100 million mark from 42 million now.

MFs’ growth in recent years can be mostly attributed to equity schemes. Do you see the growing reliance on equity schemes as a risk?

It is true that the growth has come on the back of equity schemes. The market has mostly been on the bullish side since the Covid drawdown and that helped equity schemes attract more investors. Post the change in debt fund taxation, hybrid funds have emerged as a better alternative to investing separately in equity and debt schemes. We think hybrid investing will catch up with time. There are also plans for an ad campaign to promote debt funds. We are aiming for a balanced growth between equity and debt.

As Amfi’s budget is linked to the AUM, do you plan to raise the allocation towards advertisements?

The allocation towards advertisements will be in the same proportion as it is right now.

Any new initiatives or campaigns you are working on?

From an investor awareness perspective, we are working on a campaign to create awareness about debt funds targeted at investors with lower risk appetite and those who prefer traditional savings instruments. Also, we will focus on ‘Mutual Funds Distributor Karein Shuru’ campaign to recruit more distributors.

A lot of new investors have come with high expectations, as evident by the surge in inflows into the red-hot smallcaps. How can the industry manage this expectation?

One of the things we always tell investors is that MFs, especially equity schemes, are not for the short term. Also, systematic investment plans or SIPs are being propagated as a go-to investment route as they reduce the risk of timing to a certain extent. The industry is always looking to identify risks and put in necessary safeguards. Investor education programmes are done on a continuous basis. Amfi, under the ‘mutual funds sahi hai’ campaign, also regularly puts out advertisements to apprise investors of the risks.