Indian Mutual Fund : 30% of Assets from Equity Schemes

The Indian Mutual Fund  (MF) sector over a period of a decade (10 year)  has crossed Rs. 12 lac crores of Asset under Management (AuM) out of which more than 30% of these AUMs are from equity schemes. 

In the year 2014-15 the net inflows of equity AUMs have crossed Rs. 71,000 crores from total inflows. 

Mr. U. K. Sinha, Chairman, Securities and Exchange Board of India (SEBI) acknowledged that the Indian Mutual Fund sector has helped in countering the volatility caused by the investments pattern of Foreign Portfolio Investors (FPI) & brought the macroeconomic stability to Indian markets while speaking at the 11th edition of CII Mutual Fund Summit held at Mumbai

He further stated that the Governments decision of allowing the Employees Provident Fund (EPFO) to invest in the MF schemes is a great achievement.

Mr Sinha mentioned that while the industry is at the peak of optimism it should think of medium to long-term measures for the sustainable growth of the industry. The industry should now focus on how equitably they are serving the requirements of the customers.

In the last 3 years the measures such as reduction in transaction charges, introduction of consolidated account statements, availability of MF units in demat form, fungibility of total expense ratio, encouraging voting by asset managers to protect interest of minority share holders, addition disclosure of distributors, tax clarity on offshore funds, recent announcement in the budget over tax clarity for scheme mergers and many more.   


 Consumer protection is one of the prime focus areas of SEBI and cost to investor will be important aspect of future course of action. The Finance Ministry has also set-up a Financial Stability Development Council to take into account the cost structures, added Mr Sinha. 

He also shared the concern over the quality of investor education programme carried out by the industry and expressed that AMFI will take the cognizance of the situation. SEBI is also awaiting the judicial verdict on the SRO, further to which it will move forward.

Mr. Leo Puri, Chairman – CII Mutual Fund Summit 2015 and Managing Director, UTI Asset Management Co. Ltd. said, ''Acceleration of innovation by investment managers will be critical driver for growth, as firms work to cut through the complexity of distribution channels &  product development. It is necessary for the industry to focus on targeted sales, product differentiation, response to regulatory events and operational innovation to efficiently & quickly gain competitive advantage."  

 “With rapidly changing customer expectations and other industries raising their bar on services mutual fund industry needs to focus on customers by using the growing prevalence of social media & increasing adoption of direct investment route. There is also a growing need of improving market penetration specially to drive distribution in B-15 markets for which banks could seen as partners for MF sales with their branch networks”, added Mr. Puri. 

Indian asset management industry has also grown at 20% CAGR in the last 4  years, mentioned Mr. Peeyush Dalmia, Partner, McKinsey & Company while speaking at CII Mutual Fund Summit. 

He also mentioned that the spilt up of AUM suggest that close to 72% of the investments comes from top 5 cities and from the remaining, close to 14% comes from the next 10 cities. 

Significant difference in retail flows of large, medium and small companies are been witnessed in terms market penetration. Private equity investments, ETFs, portfolio management services and REITs can be sighted as alternative market to grow further. 

To attract MF investors and providing better services industry can look atshifting customers to digital channels, creating awareness among investors, managing sentiment expressed by investors on social media and fostering collaboration between R & Ts and AMCs.

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