Mutual Funds Add Rs 3.15 Lakh Crore To Asset Base In 2019: AMFI Data
Indian five hundred rupee banknotes are arranged for a photograph in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Mutual Funds Add Rs 3.15 Lakh Crore To Asset Base In 2019: AMFI Data

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Mutual funds have added Rs 3.15 lakh crore to their asset base in 2019, on the back of robust inflows in debt schemes and measures taken by the Securities and Exchange Board of India for boosting investor confidence.

The assets under management of the industry rose to Rs 26.77 lakh crore at the end of December2019 from Rs 23.62 lakh crore at the end of December 2018, according to latest data from the Association of Mutual Funds in India.

The AUM growth seen by the 44-member mutual fund industry in 2019 is significantly higher than 7.5 percent increase seen in 2018. However, the growth was much more higher at 32 percent in 2017, when the asset base expanded by over Rs 5.4 lakh crore.

Industry experts said the double-digit growth is a positive sign given the negative sentiment about equity and fixed income securities. This growth should be primarily credited to inflows in debt-oriented schemes, steps taken by SEBI that boosted investor confidence, and to distributors for helping take the message of "mutual fund sahi hai" (mutual funds are right) to every nook and corner of the country.

"Growth we now see in AUMs is largely attributed to debt-oriented schemes. The inflows in debt-oriented schemes have been surprisingly high and saved the year 2019 from becoming a 'dark-dull year of investing', as the year saw Sensex at its record high, investors chose to book profits and drew themselves away from all the negative aura that was around markets,” Jimmy Patel, chief executive officer of Quantum Mutual Fund, said.

"While SIP (Systematic Investment Plan) inflows were impressive with around Rs 8,000-crore-plus, the overall equity excitement was missing. The positive side to this is that investors have not lost their complete faith in equity investments and trust the process of SIP," Patel added.

2019 marks the seventh consecutive yearly rise in the mutual fund industry's AUM after a drop during the two preceding years. The AUM of the industry has grown from Rs 8.22 lakh crore in November 2009 to Rs 27 lakh crore in November 2019, indicating an over threefold jump in 10 years.

The year has also seen repayment issues and downgrades with certain companies, which affected investor sentiment. However, this has also resulted in investors becoming more aware about the overall risk involved with different categories of mutual funds and now choose funds based on their risk appetite.

In terms of asset size, HDFC Mutual Fund continued to lead the pack with an AUM of Rs 3,82,517 crore (excluding fund of funds) at the end of December 2019, followed by ICICI Prudential Mutual Fund (Rs 3,61,506 crore) and SBI Mutual Fund (Rs 3,52,632 crore).

Going ahead, Patel said 2020 will be the year of SIPs, which will rule over lump sum investments and millennials will start investing in mutual funds.

"If the regulatory framework and the supportive infrastructure is conducive there may be investment by mutual funds in commodities. Overall in my view one could expect a marginal growth in the year 2020. However, mutual fund as an avenue for investment is here to stay," he added.

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