Page 18 - Banking Finance July 2017

MUTUAL FUND

AMFI predicts mutual fund industry AUM doubling in Mutual Fund Bank stocks

5 years being bullish
The Assets Under Management (AUM) AMFI data shows that the MF industry Mutual fund managers continued to
of the mutual fund industry is seen to had added about 6.26 lakh SIP ac- be aggressive
doubled in the next 5 years, according counts each month on an average dur- on bank
to A. Balasubramanian, Chairman of ing the FY17, with an average SIP size shares, with
Association of Mutual Funds in India. He of about Rs 3,200 per SIP account. their alloca-
is confident that the assets can still Indian mutual funds have currently tion to the
grow @20% for the next 5 years. Cur- about 1.40 crore SIP accounts through sector reach-
rently, the total assets-equity and debt- ing an all time-high of over Rs 1.44
which investors regularly invest in fund
managed by 43 active schemes. lakh crore at the end of May, as com-
Asset Management pared to Rs 90,014 crore at the end
Companies stands at Rs SIP has been gaining of May 2016. Banking continues to be
19.04 lakh crore. This is popularity among Indian the most preferred sector with the
three times of the asset MF investors, as it helps fund managers as they cannot afford
base five years back. in rupee cost averaging to take a bearish call on banking
and also in investing in a
Two factors , generally disciplined manner with- stocks, given the high weightage at-
drive inflows into mutual funds. One out worrying about market volatility tached to the index. Mutual funds
has been the increasing shift away and timing the market. Along with ease are investment vehicles made up of
from physical assets like the real estate a pool of funds collected from a large
of investing it also gives the diversifica-
and gold because of poor returns. A tion benefits, most investors prefer number of investors. They invest in
good chunk of that money is now go- mutual funds to equities or bonds. AMFI stocks, bonds, money market instru-
ing into financial instruments, notably ments and similar assets.
equities and mutual funds. The other as a body is undertaking nation-wide in- "MFs have been adding exposure to
reason has been some well-timed ini- vestor awareness programs to pro- the financial sector, especially bank-
mote proper understanding of the con-
tiatives by the Securities and Exchange ing stocks because of lower valua-
Board of India (SEBI) in 2012 to boost cept and working of mutual funds, tions due to price corrections and
the mutual fund industry. The steps in- Balasubramanian said. growth in corporate lending. Be-
cluded abolishing exit load, allowing In March, AMFI had launched a media sides, bank's NPA (non-performing
MFs to charge higher expense ratio for and communication campaign called asset) problem is getting sorted out,"
promoting in Tier II cities. SEBI also "Mutual Funds Sahi Hai" which appears said Kaustubh Belapurkar, Director
allowed service tax that was paid by in different media such as TV, Digital, Manager Research, Morningstar In-
AMCs to be passed through to the in- radio, print, cinema and outdoor hoard- vestment Adviser.
vestors. ings in different languages. This cam- The relaxation, which will exempt in-
"Along with AUM growth, we have paign aims to position mutual funds as vestors from making a mandatory
also seen growth in equity assets from a preferred investment option for po- open offer subject to shareholders'
1.8 lakh crore in 2012, to 6.8 lakh tential investors. nod and some other conditions.
crore," says eloquent Bala. According SEBI has also mandated mutual funds
to the data on SEBI, the total folio to set apart 2 basis points for investor SEBI's decision on restructuring in
count at the end of May stood at Rs education. Half of this amount is shared stressed firms comes against the
5.72 crore, 1.8 % higher than April. with AMFI for better utilisation of the backdrop of the government and the
With systematic investment plans or funds. About the industry challenges, Reserve Bank of India (RBI) stepping
up efforts to tackle the menace of
SIPs -- adding Rs 5,000 crore per Balasubramanian said mutual funds are bad loans, amounting to more than
month, the industry is finally getting gaining prominence in the overall in-
long-term money. The Chairman be- vestible instrument but at the same Rs 8 lakh crore. Overall, the deploy-
ment of equity funds in bank stocks
lieves that rising number of SIPs time there is a challenge in getting in- stood at Rs 1,43,704 crore at the end
are indicator of investors beginning to vestors on board and getting them to
mature. comply with KYC norms. of May 2017.

18 | 2017 | JULY | BANKING FINANCE

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