The Indian mutual fund industry has been on the fast track to growth in the last decade. At 12.5% annualised growth rate, it is growing at double the rate clocked by world and developed countries, shows a recent AMFI-CRISIL study. The growth has been significant in the last three years due to expanding domestic economy, increased individual participation and better awareness owing to AMFI campaigns.
Growth of Indian assets compared to the world
While the total assets managed by Indian mutual funds is miniscule compared to the AUM world over, Indian mutual funds have nearly doubled their market share in the asset pie during the last 10 years. The report shows that the market share of Indian mutual fund industry to the world has doubled over the last ten years i.e. from 0.33% in 2008 to 0.60% in 2018. In Asia Pacific region, Indian MF industry accounts for 4.37% of the assets.
Share of Indian MF industry
On domestic front, mutual funds now command a respectable share of investor’s wallet, shows the report. In the last three years, the share of mutual funds in financial savings has grown from 10% in March 2016 to 14% in March 2018. This increase has come at the expense of bank deposits.
Share in financial savings
|
Year |
Bank |
Insurance |
Mutual fund |
|
March 2016 |
71% |
19% |
10% |
|
March 2017 |
69% |
19% |
12% |
|
March 2018 |
65% |
21% |
14% |
Source: AMFI CRISIL study
The report said that this has resulted in emergence of mutual funds as key players in the financial services industry. Strong and robust domestic mutual fund industry helps combat any hot money flows of foreign investors, added the report.
Analysis of capital market inflows (excluding long-term strategic investments) puts mutual fund share in equity markets at 18.4% in March-2018 rising from 8.5% in March-2014. In comparison, share of foreign portfolio investors fell 61.8% to 56.4% in the corresponding period. Insurance companies too saw a marginal decline in their share from 22.7% to 17.4% in the four years.
In debt markets, however, mutual funds are still minor players having just 12.1% market share of the market. Banks and insurance companies who have regulatory mandate to invest in government securities occupy 33.2% and 23.4% share in debt markets. In comparison, mutual funds occupy larger chunk of the corporate bond market having 34.9% share. Banks and insurance companies, on the other hand, have 8.3% and 20.3% market share in corporate bond market respectively.
