The asset base of the country’s mutual fund (MF) industry rose to almost Rs 12 lakh crore in 2014-15, with Indians pooling in about Rs 3 lakh crore during the year, according to data given by the Association of Mutual Funds of India.
The current figure makes the MF asset base equal to about 15% of India’s bank deposits —largely considered to be safer than mutual funds, which bring higher returns but also involve higher risks.
The run-up in the equity markets (25% rise in the BSE Sensex in 2014-15) has led to an increased interest in MFs, while the debt fund flows have also remained strong, leading to overall rise in the assets under management, say industry watchers.
For the financial year-ended March 31, India’s 44 asset management companies saw their average assets under management (AUMs) rise 31% to Rs 11.9 lakh crore.
“The impressive growth in asset base is due to improved stock market condition and strong inflows in equity and ‘liquid’ or ‘money market’ segments,” said DP Singh, chief marketing officer, SBI Mutual Fund. He expects a much broader participation in 2015-16.
Among individual mutual funds, the top five fund houses— HDFC, ICICI Prudential, Reliance, Birla Sun Life and UTI — strengthened their positions over the last one year.
Fund managers remain bullish on the growth ahead, given that equity markets are expected to continue doing well with the economy looking up, and corporate earnings also likely to pick up over time.
“In the next five years, growth will only accelerate, interest rates keep coming down, companies’ profits will go up. If in the next 3-5 years we see the economy going back to 8-9% growth, corporate profits will be 25% and you can see where the stock markets will be then,” said Chandresh Nigam, MD and CEO of Axis Mutual Fund. The fund house had AUMs of Rs 26,717 crore as of March 31.
While AUMs have increased and fund houses remain bullish, there have been some exits too. Birla Sun Life Insurance MF acquired ING’s Indian fund assets and Kotak MF acquired Pinebridge’s Indian MF business. (With PTI inputs)