NEW DELHI: Buoyed by ever-increasing participation from retail investors, new asset management companies (AMCs) have set ambitious targets for themselves.
They believe that as India’s economy and corporate earnings grow, more and more people will start investing in mutual funds.
“India’s population is 140 crore and of that 130 crore has an Aadhaar card and 75 crore has a PAN (permanent account number) card. At present, there must be around 60 crore people whose PAN is linked to Aadhaar - people who are eligible for the KYC (know your customer) process to open their account in the MF industry.
At present, however, the MF industry has only 4.80 crore PAN. We are not even 10% of what we can be,” said Mayukh Dutta, Chief Business Officer at ITI Mutual Fund. Dutta highlighted the country’s strong fundamentals and the immense potential for growth in the domestic equity markets. ITI Mutual Fund, which started in 2019, has set an ambitious target to reach R1 lakh crore AUM in the next five years.
The company’s asset under management (AUM) increased nearly 2.4 times to R8,791 crore in July 2024 from R3,698 crore in March 2023. Some of its funds such as ITI ELSS Tax Saver Fund, ITI Multi Cap Fund and ITI Small Cap Fund have given a return of 51-64% in the past one year.
“India’s economic growth trajectory offers a unique opportunity for mutual funds. With the country’s anticipated growth rate surpassing many global economies, ITI AMC is poised to experience significant expansion. We aim to capitalise on this favourable environment. We are aiming to reach an AUM of R1 lakh crore within the next five years,” said Dutta.
In the last 10 years, the Indian mutual fund industry’s net AUM has grown by more than 6 times to about R65 lakh crore. In May 2014, the industry’s AUM stood at R10 lakh crore. The industry is hopeful that the it will hit the R100 lakh crore mark in less than 2 years.
This phenomenal growth has been amply supported by retail investors who have been pouring money via systematic investment plans (SIP). The monthly SIP contributions reached an all-time high, crossing the R23,000 crore mark in July 2024. The number of SIP accounts in the industry stood at 9.34 crore.
Expecting India’s growth story to continue, a good number of legacy names as well as new-age companies have joined the bandwagon. New names such as Zerodha, Helios, White Oak and Bajaj Finserv AMC are becoming quite popular among investors. Bajaj Finserv Asset Management, a 100% subsidiary of NBFC major Bajaj Finserv, said that in the long run, they want to be among the top 10 AMCs in India.
The AMC also marked the first anniversary of its equity fund, Bajaj Finserv Flexi Cap Fund. In its first year, the fund’s AUM crossed R3,500 crore and it recorded returns of 41.30% under the regular plan and 43.43% under the direct plan.
In its first year, Bajaj Finserv Asset Management house has launched 10 active schemes, (3 Equity, 4 Debt and 3 Hybrid) along with 3 ETFs registering a total AUM of R17,255 crore (as on August 31, 2024).
Ganesh Mohan, CEO of Bajaj Finserv AMC, said, “This (Megatrends) strategy allowed us to spread investments over time, reducing the impact of market volatility from geopolitical risks and optimizing our entry points.” “This approach ensured that our fund remained true to its label, dynamically adjusting market cap allocations and strategically selecting sectors based on evolving market conditions,” he added.
Zerodha Fund House in late March this year announced that it had crossed assets under management of R1,000 crore in less than five months. The fund house, which focuses only on passive funds, has added R 500 crore in the last 40 days. Zerodha AMC is a joint venture between online stock broking firm Zerodha and fintech company smallcase.
Zerodha ELSS Tax Saver Nifty LargeMidcap 250 Index Fund, Zerodha Nifty LargeMidcap 250 Index Fund and Zerodha Gold ETF are some of the offerings by the fund house. Experts said that the industry will add 4-5 new AMCs every year given more people are expected to invest in the equity market. However, they also highlighted current risk, including current valuation of the market, geopolitical development and delay in interest rate cut by the US Federal Reserve.