Assets under management (AUM) of India’s mutual fund (MF) sector hit a record high of Rs 11.8 lakh crore in January, a rise of nearly 12 per cent from the previous month. Continuous inflow in a majority of the asset categories, particularly equity, along with a rally in the stock markets, is helping the sector gain in size.
“The industry is targeting a total AUM of Rs 20 lakh crore by 2020. It appears we can achieve it much ahead of that,” said Sundeep Sikka, chairman, Association of Mutual Funds in India. Income funds saw a net inflow of Rs 12,163 crore in January.
Equity-related schemes saw inflow of Rs 7,663 crore. Balanced funds got Rs 835 crore and gilt funds a net inflow of Rs 1,813 crore. However, gold exchange-traded funds could not keep pace and continued to see outflows, worth Rs 131 crore in January.
According to Milind Barve, managing director of HDFC MF, “Equity as an asset class is gaining attraction among investors. Last year was a year of the return of hope. Optimism was back after the landmark election result in May. The good part is those who for many years had been buying into gold and other physical assets are now interested in buying financial assets, like equities.”
The smaller cities and towns are also contributing more to the overall AUM. According to sector executives, the investors’ base beyond the top 15 (B-15) cities is now at par with the top 15. In equities, they put the figure at a little over Rs 1 lakh crore of the Rs 3.4 lakh crore of overall equity assets.
Nimesh Shah, managing director of ICICI Prudential MF, said: “There is increased enthusiasm for distributing MFs in B-15. The equity markets generating superior returns over the past few months has resulted in building a reasonable breadth of B-15 investors, content with their investments, and the momentum is catching up.”
Investor awareness and education programmes by fund houses, coupled with the incentive scheme introduced by the market regulator, have yielded results, say those in the sector. The Securities and Exchange Board of India allows MF houses to charge an additional 30 basis points in the total expense ratio if 30 per cent of the new flows are from B15.
There are 43 fund houses. The total folio count, across categories, is about 40 million.