The mutual fund industry enters 2022 on a strong note. The previous year was marked by heightened investor interest and the emergence of passive funds as a popular option.
What new trends can emerge in 2022? Top MF executives try to predict:
Strong growth in SIP accounts
SIP account addition hit the fast lane in 2021. There were record account openings and contributions through the SIP route last year. Over 2 crore SIP accounts were opened till November and the AUM surged to Rs. 5.4 lakh crore from Rs. 3.9 lakh crore.
Industry insiders believe that the strong SIP growth trend will continue next year.
"I see the strong growth in SIP to continue. Two things will drive the interest — one is greater push in the smaller markets and the second being the TINA (there is no alternative) factor," said Ashutosh Bishnoi, MD & CEO of Mahindra Manulife MF.
Investor interest may return to debt funds
Investor interest may return to debt funds in the second half of 2022. According to the MF CEOs we spoke to, interest rates are likely to stabilise by mid-2022 and that is when the debt fund returns will start to climb up.
"Last year, the debt fund returns were fairly subdued. Most scheme categories have delivered 3-4%. In the first half returns will remain subdued but may improve in the second half of 2022," said Sandeep Bagla, CEO of Trust MF.
Tech adoption to pick pace
The year 2022 could see wider adoption of technology by investors, MFDs and mutual funds. This could pave the way for the industry to reach more investors in the hinterland.
"The shift towards digital will pick further pace. More and more investors will adopt digital modes of transaction," said G Pradeepkumar, CEO at Union MF.
Hybrid funds to gain traction
Hybrid funds might become the preferred mutual fund option for a large section of investors due to pricey equity valuations and subdued returns in the debt space.
"I see hybrid funds gaining popularity as investors would want to play safe. They have made good returns from equity funds last year and would now look for safer options," Ashutosh Bishnoi said.
"Asset allocation is likely to gain importance next year. So, you might see higher interest in hybrid funds like balanced advantage," G Pradeepkumar said.
Passive to gain further prominence, commodity funds can also do well
The traction that passive funds received in 2021 is likely to accelerate further in 2022, says Lav Kumar, Zonal Head West, LIC MF.
He is also positive on the return of investor interest in gold funds. "Funds that invest in commodities like gold and silver may see investor interest," he said, adding that crypto funds can also catch the investors’ eye if the government and SEBI give their go ahead.
Overseas and smart beta funds to catch on
The interest in overseas funds may go up further in 2022, according to Sandeep Bagla. He also sees smart beta products, which are somewhere between active and passive, gaining popularity.
