BENGALURU: Mutual fund houses are seeing a steep rise in investments, even as retail investors are exploring options beyond the traditional savings provided by banks.
According to the Association of Mutual Funds in India, the total amount collected through systematic investment plans (SIPs) in April was Rs 4,269 crore. The mutual funds sector added 6.26 lakh SIP accounts each month on an average during FY17, with an average SIP size of Rs 3,200 per SIP account, the association stated. Experts say this growth is here to stay, as the Indian public is opening up to new investment modes.
Take, for instance, the case of Kotak Mutual Fund. The company added more than 7 lakh new SIP accounts in March this year, while, overall, it saw 75 lakh new SIPs for FY17, according to Lakshmi Iyer, CIO (debt) and head – products at Kotak Mutual Fund.
The overall MF Assets Under Management grew from Rs 16,46,337 crore to Rs 19,26,302 crore between December 2016 and April 2017, said Jean-Christophe GOUGEON, director – investment solutions at Sharekhan. “During the same period, income fund grew only 4.4 per cent, equity 20 per cent and liquid funds by 34 per cent. Overall, as of end-April, income funds represented 41 per cent of total MF AUM, equity 26 per cent and liquid market 22 per cent...” Gougeon added.
Bhavana Acharya, analyst (mutual funds research) at Funds India, told Express that increased awareness on the benefits, drop in bank fixed deposit rates and a slump in the real estate market were some of the key factors driving this growth.
“Tax-saving mutual funds saw inflows more than double in FY16 and rose 57 per cent in FY17. The thrust on SIPs as the best mode of investing has additionally encouraged participation, as is evident from the rise in SIP folios and inflows through this mode,” Acharya pointed out.
Further, the retail investors’ ticket size is likely to increase in the SIP folios. The average size now is Rs 3,000, which might move to Rs 4,000 through the year. “If that happens, and if the addition of new SIPs keeps pace with last year, the SIP inflows into mutual funds could go up from Rs 4,200 crore a month to Rs 5,000 crore a month. Considering that most of this inflow would go into equity-oriented funds, that would represent a healthy growth for the industry as a whole,” she added.