Riding on the overall positive mood on the Indian economy,
the asset base of the mutual fund industry in the country is set to grow faster
at 18.6% per annum to top Rs.20 lakh crore ($325 billion) by 2018, says a top
industry expert.
"The overall positive environment that we have seen
over the past year is giving a big boost to the confidence level of retail
investors in India," said Sundeep Sikka, chairman of the Association of
Mutual Funds in India (AMFI) that has as members all the 44 such firms
registered with the watchdog.
"I think the positive returns in the mutual fund
industry, along with the push being provided by the government create both
physical and financial assets and will also play a big role in promoting mutual
funds," said Sikka, also president and chief executive of Reliance Capital
Asset Management (RCAM).
Accordingly, he said, the time for mutual fund asset base to
reach the Rs.20 lakh crore figure was being advanced by two years, even as the
total number of individual mutual fund folios, which is 4 crore at present, is
set to touch 10 crore in the next five years.
Referring to the past fortnight, Sikka said the domestic
funds industry were able to counterbalance the exodus of foreign institutional
investors. While these overseas funds pulled pout some Rs.8,000 crore from
Indian stocks, domestic fund houses were net buyers of Rs.9,500 crore.
"In fact, in the past one year, our mutual funds have
been able to provide a counterbalance of over Rs.70,000 crore, thanks to the
net investment into equity schemes," he said, adding the decision to allow
15% of provident fund money into equity and similar assets will give a further
push.
Giving some more data on the past-year performance of the
mutual fund industry in India, Sikka said assets under management rose 31% to
Rs.11.8 lakh crore, some 22 lakh new folios were added during the year, and
retail funds mobilised at Rs.1.63 lakh crore has seen a three-fold jump.
"The kind of wealth investors have created in the last
few years will lead to a situation where more and more new investors will keep
coming to the industry. Existing investors will also keep increasing their
allocations," said Sikka.
He said companies like Reliance Capital -- a part of the
Anil Ambani-led group that has assets worth over Rs.250,000 crore ($40 billion)
in its fold -- are also educating people and creating awareness, notably in
smaller towns. "This will fetch a lot of first time investors into the
industry," he said.
"At present, only 2% of the overall investment money
comes to mutual funds."
Sikka was also positive about several developments, all with
the potential to fetch more money into the mutual fund market. Flows from: Idle
money in banks, from investments otherwise made in company deposits, and amount
that goes into gold that has been losing sheen over the past few years.
"Ideally we would like to see every Indian household as
a mutual fund investor. In India, where there is little social security, and
long term wealth can be created in the capital markets through equity, it is in
the interests of investors and the country that money starts moving for capital
formation."
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