New Delhi: Mutual funds have added a staggering over Rs 4 lakh crore to their asset base in 2019 and the industry expects the growth trajectory to continue in the New Year on the back of strong inflows in debt schemes and measures taken by regulator Sebi for boosting investors’ confidence.
It was because of strong inflows into debt-oriented schemes that saved 2019 from being a ‘dark-dull year of investing’ as inflows into equity funds has dropped this year due to a volatile market.
Going ahead, the industry should witness growth in the range of 17-18 per cent in 2020 and equity funds should see robust inflows as expectations are high about improved equity markets and a revival in economic growth, industry body Association of Mutual Funds in India (AMFI) CEO NS Venkatesh said.
The asset under management (AUM) of the industry rose by 18 per cent (Rs 4.2 lakh crore) to an all time high of Rs 27 lakh crore in 2019 by November-end itself, up from Rs 22.86 lakh crore at the end of December 2018, as per the latest data available with the AMFI.
Some industry experts said the final December-end figure might be slightly lower than the November-end level, as liquid funds could see some dip due to a quarter-end phenomenon.
Kaustubh Belapurkar, Director (Manager Research) at Morningstar Investment Adviser India said, “While the mutual fund industry saw a significant growth post-demonetisation, there has been steady but not spectacular growth in 2019. But given the backdrop of the pessimism due to slowing economic growth, credit crisis and volatile markets, this growth is also quite admirable.”
The investor count is estimated to have grown by over 62 lakh during 2019, to 8.65 crore this year. In 2018, investors’ folio grew by more than 1.3 crore.
The 18 per cent AUM growth seen by the 44-member mutual fund industry in 2019 is significantly higher than 7.5 per cent witnessed in 2018. However, the growth was much higher at 32 per cent 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 and should be primarily credited to inflows in debt-oriented schemes, steps taken by Sebi which boosted confidence among investors 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.
“The growth in AUM is largely attributed to debt-oriented schemes. In fact, inflows in debt oriented schemes have been surprisingly high and saved the year 2019 from being a ‘dark-dull year of investing’. As the year saw Sensex at its record high, investors choose to book profits and drew themselves away from all the negative aura around markets,” Quantum Mutual Fund CEO Jimmy Patel said.
Kotal Mahindra AMC MD and CEO Nilesh Shah attributed the growth to three factors – first, Sebi, as a regulator, consistently created rules and regulations that boosted investors’ confidence in the industry, then to distributors and thirdly to the mutual funds for managing risk-return balance well. Besides, mutual funds have done a decent job of managing risk and optimising return, Shah said.
The year 2019 marks the seventh consecutive yearly rise in the industry AUM after a drop for 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 three-fold jump in 10 years.
With regard to debt markets, a whopping Rs 1.2 lakh crore has been infused in fixed income securities as debt funds are considered to be less risky. Some investors take comfort in being able to hedge their risks by parking their funds in instruments that provide better returns than bank fixed deposits.
PTI