The new financial year started on a positive note for the Indian mutual fund (MF) industry as it came within striking distance of the Rs. 20 lakh crore milestone and could touch the magic figure in the very next month itself if industry assets grow by another 4%. According to data from Association of Mutual Funds in India (AMFI), the Assets Under Management (AUM) of the Indian MF industry grew 9.8% from Rs. 17.54 lakh crore in March 2017 to Rs. 19.26 lakh crore in April 2017.
Of the Rs. 1.5 lakh crore that investors pumped in different categories in April 2017, Liquid, Income, and Equity funds (including Equity Linked Savings Schemes or ELSS) saw the highest inflows. The three categories saw net inflows of Rs. 0.99 lakh crore, Rs. 0.35 lakh crore, and Rs. 0.09 lakh crore, respectively.
Equity funds also got support from the broader market rally as BSE Sensex touched an all-time high of 30,000 in April 2017. Secular growth of Systematic Investment Plans (SIPs) and investor awareness campaigns have been the two mainstays of the Indian MF industry in the recent past.
Net inflows in Equity hit five-month high in April 2017
Equity funds (including ELSS) witnessed net inflows of Rs. 94.29 billion in April 2017, an increase of 14.8% MoM and 112.5% YoY. This comes on top of over Rs. 700.00 billion investments in equities in FY2017. The inflows are an indication that Indians are slowly but steadily moving from physical to financial savings.
In April 2017, net inflows vide the SIP route hit an all-time high of Rs 42 billion as investments in SIPs continue to capture the imagination of retail investors. According to AMFI, the mutual fund industry added about 6.26 lakh SIP accounts every month on an average during FY2017, with an average ticket size of Rs. 3,660 per account.
FY2017 saw mutual funds surpass the amount FIIs put into the country's equity market-MFs pumped in Rs. 549.12 billion against Rs. 529.77 billion by FIIs/ FPIs. The trend continued in April 2017 where MFs' quantum of net investment in equities stood at Rs. 99.18 billion compared with Rs. 24.17 billion of FIIs/ FPIs.
MF industry adds 7.4 lakh folios in April 2017
The total folio count at the end of April 2017 stood at 5.61 crore, 1.3% higher than March 2017, according to data from the Securities and Exchange Board of India (SEBI). The growth was primarily on the back of 5.85 lakh new folios added to the Equity category (including ELSS) and 1.5 lakh new folios to the Balanced category. Exchange traded funds were the only category to witness a decline of 20,000 folios, which could be due to the category’s underperformance compared with the actively-managed funds.
Assets in B15 locations continue to grow due to investor-friendly initiatives
In the last 12 months, assets from B15 towns have grown 43.9% due to investor-friendly initiatives by regulators and campaigns by AMCs. In April 2017, the B15 assets grew by Rs. 985.25 billion and stood at Rs. 3.23 lakh crore compared with Rs. 2.24 lakh crore in April 2016. Currently, B15 accounts for 16.9% of the total assets of the MF industry, however the share of direct plans in B15 towns is only 22.3% against 45.6% in T15 cities.
Mutual funds to go the e-wallet way
SEBI has allowed investors to purchase MFs up to Rs. 50,000 per fund house per annum through e-wallets in order to promote digital transactions in the MF industry. The redemption of such investments can be made only through the bank account of the investor. The mandate specifies that the e-wallet issuer company cannot offer any kind of incentives such as cash-back for purchasing mutual funds and the e-wallet has to be loaded using only net banking, debit card, and cash.
