Of the total Rs.22 lakh crore industry AUM as on December 2017, IFAs manage AUM of Rs.3.39 lakh crore, shows MFDEx data that constitute 96% of the industry. This indicates that IFAs managed 15% of the total assets.
The assets under advisory (AUA) of IFAs went up from Rs.2.50 lakh crore in January 2017, indicating a growth of close to 40% in AUA or Rs.83,000 crore in 11 months. Experts attribute this both to the mark-to-market gains and increase in retail inflows.
The data shows that there has been a high absolute increase in AUA of IFAs from T15 cities. The assets managed by IFAs in T15 cities increased to Rs.2.19 lakh crore in December, from Rs.1.70 lakh crore in January 2017, an increase of Rs.48,790 crore.
In percentage terms, advisors operating in B15 locations saw the highest increase in assets. The assets in B15 cities increased from Rs.85,293 crore to Rs.1.19 lakh crore in December.
G. Pradeepkumar, CEO, Union Mutual Fund, believes that rising AUA of IFAs in B15 cities is due to the presence of IFAs in these locations. “Awareness of mutual funds in B15 areas is increasing due to investor awareness programmes and ‘Mutual funds sahi hai’ campaign. Many investors have now begun to invest in mutual funds in these locations. These investors need handholding by distributors,” he said.
“Investors have become interested in mutual funds as the rate of interest on fixed deposits and other traditional investment have declined in the past few months. People have become aware that the rate of interest fetched by these investments hardly beats inflation and hence they realise that wealth generation is not possible through FDs. These investors approach us seeking advice on mutual funds,” said Bhilai-based Zian Khan of Omega Financial.
With institutions and corporates favouring direct plans to invest in liquid and debt schemes, direct plans account for a substantial share. These are generally not sticky assets as corporates invest in these funds to park their surplus cash for a short period only.
The assets of national distributors such as Fundsindia, Prudent and NJ, that operate under sub-broking model was next in line after IFAs. The assets managed by national distributors stood at Rs. 2.95 lakh crore on December 2017. It increased by Rs.27,325 crore, or 11%, from January 2017. However, not all national distributors work under the sub-broking model.
The data shows that the increase in assets of national distributors in B15 cities far exceeded the increase in T15 ones. While the assets in the former increased by 40%, assets in T15 cities increased by 28% only.
The assets managed by banks stood at Rs.3.52 lakh crore in December. The private banks managed a higher share—the AUA of private banks was Rs.2.91 lakh crore at the end of 2017.
AAUM Trend by Distributor Category
Month |
Region |
Direct |
IFA |
National distributor |
PSU bank |
Other banks |
Regional distributor |
Others |
Grand total |
January 2017 |
T15 |
649,310 |
170,410 |
245,746 |
15,140 |
203,054 |
44,664 |
109,697 |
1,438,021 |
B15 |
40,067 |
85,293 |
22,905 |
16,505 |
29,698 |
4,521 |
26,433 |
225,423 |
|
Total |
689,377 |
255,703 |
268,651 |
31,645 |
232,752 |
49,185 |
136,130 |
1,663,444 |
|
December 2017 |
T15 |
840,992 |
219,199 |
259,408 |
26,450 |
246,759 |
55,191 |
185,882 |
1,833,882 |
B15 |
53,108 |
119,397 |
36,568 |
34,150 |
44,385 |
7,127 |
56,675 |
351,411 |
|
Total |
894,100 |
338,596 |
295,976 |
60,600 |
291,144 |
62,318 |
242,557 |
2,185,293 |
|
Difference |
204,723 |
82,893 |
27,325 |
28,955 |
58,392 |
13,133 |
106,427 |
521,849 |
|
Difference % |
24 |
38 |
11 |
109 |
24 |
24 |
57 |
28 |
Source: Cooperative MFDEx Data
Figures in Rs. crore