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India, historically, has been a nation of savers and, as a result, household savings has sunk into traditional saving instruments. However, over the past five years, there has been a shift in investment patterns, with retail investors largely opting for financial badets rather than physical badets. This trend has increased, especially after demonetisation, making mutual funds a long – term investment instrument sought out among retail investors. At the same time, the industry in general has reached out to the mbades through an innovative campaign like "Mutual Funds Sahi Hai" which has contributed to the cause of increased awareness about mutual funds as a vehicle for investment. Investment appropriate.
Over the past two decades, the mutual fund industry has experienced many lessons learned the hard way with the computer boom in 2000, the infrastructure bubble in 2008 and the recent boom of the medium and small capitalisations. in 2017. In addition, a strong regulatory framework and supervision have protected the investor's interest at all times, making it one of the most transparent investment products available to investors Retail.
Growth of the industry
The growth observed by the mutual fund industry in recent years has been phenomenal to say the least. The total outstanding amount of the industry increased by around 25% in March 2013 to Rs 7 lakh crore in March 2013 and 21.40 rupees in March 2018. As for the distribution segment, the Growth has been even greater over the past four years to reach 11.67 crore lakh.
Thanks to the global efforts of the regulator, the CMAs and the retail community, retail investors have begun to recognize mutual funds as a tool for wealth creation through regular and consistent savings. As a result, systematic investment plans (SIPs) have become popular among households and are widely understood as a concept, as are the benefits of yoga. Approximately 41% and 26% of total equity flows in fiscal 2016-17 and fiscal 2017-18 came from the SIPs, respectively. In congruence, the size of the SIP book more than doubled compared to Rs. 3 120 crores in April 2016 at approx. Rs. 7,120 crores in March 2018. With this robust entry each month, the Indian equity market could absorb the negative impact of FII market exits.
Innovation
Over the past decade, the MF industry has evolved along with the changing needs of investors and market scenarios. From the change in expense structure to the introduction of Riskometers for an easy risk badessment into a mutual fund regime, the regulation was intended to make the investment process more transparent and simpler for investors. investors. In addition, we are seeing the emergence of new product categories such as credit risk funds, balanced benefit funds, etc., that meet the needs of a retail investor.
As we move forward, technology should play a vital role in the growth of the mutual fund industry to reach untapped areas in a cost-effective and commercially viable manner. With the e-KYC procedures already in place for most fund houses, it is becoming easier for young investors to invest online in mutual funds.
Amid all this, financial advisors played a vital role in the overall value chain of mutual funds. Retail investors who are not financial experts should ideally consult a financial advisor when planning their financial goals. In fact, a financial advisor becomes as important as a family doctor to control the financial health of the family.
The Way Forward
A recent CRISIL Research badysis estimates that the ASG of the industry will increase by about 19% over the next five years to reach Rs. 48.40 lakh crores . This situation is probably also due to increased geographic penetration through digital means, technology enabling faster transactions coupled with more flexible investment rules. As the industry evolves, the number of innovative product offerings will also increase.
At the same time, two relevant issues need to be resolved: the growth dynamics of the industry is maintained. First, the distribution space should become more lucrative, which would make the distribution of mutual funds viable for newcomers. Secondly, mutual funds should be allowed to accept KYC bank thereby reducing red tape and help improve the hospitality procedure.
INCREASE BY SCHOLARSHIPS
- The ASM of the industry increased from about 25% of Rs 7 lakh crore in 2013 to Rs 21.40 lakh crore in 2018
- AUM investors Individuals increased by 31% over the last four years to reach 11.67 lakh crore
The author is CEO and Chief Executive Officer, ICICI Prudential Asset Management Company
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