Listen to this article
Speaking at a CII (Confederation of Indian Industry) Mutual fund Summit 2025 that took place on April 15 in Mumbai, former SEBI chairman U.K. Sinha said there is a big difference when it comes to distributor AUM performance and direct retail AUM performance, and that MFDs and AMCs must come together to improve efficiency and figure out how to deliver better returns to investors over the medium to long term period.
Comparing the India mutual fund industry performance with the global industry, Sinha said that direct retail asset’s performance against benchmarks is superior.
He explained that if we look at the 3-year performance for direct AUM, 76% of the AUM has beaten the benchmark. For 5 years 75% and for a 10-year period, 89% of the assets of direct AUM have beaten the benchmark.
The former SEBI head also spoke on passive industry, explaining that as of December 2024, passive schemes has passed actives schemes in the USA market in size.
Turning to the global market, he expanded further, saying that in 2024, while USD 1.4 trillion of assets flowed into the global industry from passives, the flow for actives was USD 24 billion. The performance of the active large cap funds showed that 65% were underperforming the S&P 500 index. In fact, globally, there has not been a single year where 50% of the assets of active industry were able to beat the index.
In India, this trend is evident in the growth of the passives industry, which has grown five times in the last five years. While Sinha says a large portion of this growth can be attributed to EPFO/Pension investments, the trend still shows growth.
Here are other key points U.K Sinha highlighted:
- The former chairman of SEBI also said that in periods of turmoil, the Indian industry handles stress better than the US industry, due to the underpinning regulatory structure.
- The former SEBI head also said that the International Monetary Fund (IMF), in its Financial Sector Assessment Program (FSEP), applauded the Corporate Debt Market Development Fund, explaining it has provided stability to Indian investors.
