Even in a year marred by volatile oil prices, global slowdown, underperforming equities and demonetisation issues, India’s mutual fund market has grown by its fastest rate in the past 7 years. As per recently released data, India’s mutual fund assets are now worth Rs. 17 trillion with Rs. 3.71 trillion being added in just the previous year.
As per the available data, by end of December 2016, the AUM of India’s asset management companies (AMCs) witnessed an average growth of 30%, leading to an increase of Rs. 3.71 trillion to the existing mutual fund portfolio. The key reasons for this growth include increased investor interest in ETFs, steady growth of monthly investments in mutual fund schemes and surge in the number of investor accounts. In fact, data from AMFI (Association of Mutual Funds in India) shows that from December 2015 to September 2016, an estimated 4.7 million new mutual fund investment accounts were opened in India.
In terms of preferred investment style, SIPs or systematic investment plans witnessed the greatest growth reaching Rs. 4000 crores a month as compared to the average Rs. 1800 to Rs. 2000 crores per month level recorded earlier. During the same period, an estimated 10% of the annual mutual fund investments occurred in ETFs and arbitrage funds. Going forward, ETF investments are expected to witness even further growth and play a key role in creasing the overall portfolio value of India’s AMCs.