There were 4300 distributors for every 10 lakh households in T15 cities compared to 230 IFAs for every 10 lakh households in B15 cities, shows the recent report published by AMFI and Boston Consulting Group (BCG) titled ‘Unlocking the Rs.100 Trillion Opportunity’.
As the industry looks at on-boarding more investors from beyond top 15 cities, this gap in distribution density will need to be brought down significantly by setting up more channel partners in other cities, said the report.
The report also recommended tied up distribution model to the MF industry where AMCs who bring in new IFAs can work exclusively with them for some time.
Here are some key findings of the AMFI-BCG report
- Indian MF industry’s AUM growth outperformed global peers between 2007 i.e. before the economic meltdown and 2018. While most major economies like North America, Europe, Asia (excluding India) and Middle-East and Africa saw many ups and down in their AUM, Latin America and India witnessed a consistent growth in their AUM
- Globally, India ranked 17 in the asset management industry based on AUM. Interestingly, India has surpassed China in its penetration as a percentage of GDP
- Contribution from B15 cities increased by 34% in the last three years. As on March 2018, the industry had 25% of assets coming from these cities
- Mutual funds was the fastest growing financial asset. Over the last four years, household contribution towards mutual funds grew from 3% to 6%. However, small savings like FDs, RDs , direct equity and insurance contributed to a larger portion of household financial savings. Currently, financial savings is 60% of the total household savings
- MFs accounted for 16% of the total debt market as on March 2018. It was just 3% in March 2012
- Contribution of top ten fund houses to the overall AUM in India was 83%. This number in US was 62%, UK 47%, China 46% and Brazil 92%.
- Individual investors i.e. retail and HNIs accounted for 58% of the industry AUM. A major portion of their assets or 65% was in equity funds
- The proportion of equity assets to the total AUM was 45%. Globally, only US was ahead of India in such an asset mix. US had 54% of its assets in equity followed by UK and India at 45% as on March 2018
- IFAs and NDs accounted for 55% of retail assets and 40% for HNIs
- MF penetration in households was 7% in India
- There were 10% households having annual income of Rs.10 lakh and above, 37% with annual income between Rs.3 lakh and Rs.10 lakh and 53% with less than Rs.3 lakh
- Percentage of wealthy households would go up to 17% (over Rs.10 lakh income) and middle income group 46% (Rs.3 lakh and 10 lakh) by 2025
- To achieve Rs.100 lakh crore AUM in 10 years, the MF industry needs 10 crore investors, 5 lakh distributors and 50% of industry’s assets should be in equity funds
- Mutual fund, SIP calculator and SIP were the most searched keywords on google
- Of the total google searches, 38% of users were from B15 cities
- After ‘MF Sahi Hai’ campaign, the industry added over 50 lakh new investors within 12 months
- Only 9% of first time investors came to know about mutual funds through IAPs. On the other hand, 40% of first time investors came to know about mutual funds through friends, family members and CAs
