Business
India's mutual funds base to top $325 bn by 2018: RCAM's Sikka
By
Aparajita Gupta Abu Dhabi, May 10
Riding on the overall
positive mood on the Indian economy, the asset base of the mutual fund
industry in the country is set to grow faster at 18.6 percent per annum
to top Rs.20 lakh crore ($325 billion) by 2018, says a top industry
expert.
"The overall positive environment that we have seen over
the past year is giving a big boost to the confidence level of retail
investors in India," said Sundeep Sikka, chairman of the Association of
Mutual Funds in India (AMFI) that has as members all the 44 such firms
registered with the watchdog.
"I think the positive returns in
the mutual fund industry, along with the push being provided by the
government create both physical and financial assets and will also play a
big role in promoting mutual funds," said Sikka, also president and
chief executive of Reliance Capital Asset Management (RCAM).
Accordingly,
he said, the time for mutual fund asset base to reach the Rs.20 lakh
crore figure was being advanced by two years, even as the total number
of individual mutual fund folios, which is 4 crore at present, is set
to touch 10 crore in the next five years.
Referring to the past
fortnight, Sikka said the domestic funds industry were able to
counterbalance the exodus of foreign institutional investors. While
these overseas funds pulled pout some Rs.8,000 crore from Indian
stocks, domestic fund houses were net buyers of Rs.9,500 crore.
"In
fact, in the past one year, our mutual funds have been able to provide
a counterbalance of over Rs.70,000 crore, thanks to the net investment
into equity schemes," he said, adding the decision to allow 15 percent
of provident fund money into equity and similar assets will give a
further push.
Giving some more data on the past-year performance
of the mutual fund industry in India, Sikka said assets under management
rose 31 percent to Rs.11.8 lakh crore, some 22 lakh new folios were
added during the year, and retail funds mobilised at Rs.1.63 lakh crore
has seen a three-fold jump.
"The kind of wealth investors have
created in the last few years will lead to a situation where more and
more new investors will keep coming to the industry. Existing investors
will also keep increasing their allocations," said Sikka.
He
said companies like Reliance Capital -- a part of the Anil Ambani-led
group that has assets worth over Rs.250,000 crore ($40 billion) in its
fold -- are also educating people and creating awareness, notably in
smaller towns. "This will fetch a lot of first time investors into the
industry," he said.
"At present, only 2 percent of the overall investment money comes to mutual funds."
Sikka
was also positive about several developments, all with the potential
to fetch more money into the mutual fund market. Flows from: Idle money
in banks, from investments otherwise made in company deposits, and
amount that goes into gold that has been losing sheen over the past few
years.
"Ideally we would like to see every Indian household as a
mutual fund investor. In India, where there is little social security,
and long term wealth can be created in the capital markets through
equity, it is in the interests of investors and the country that money
starts moving for capital formation."
(Aparajita Gupta was in Abu
Dhabi at the invitation of Reliance Capital Asset Management. She can
be reached at [email protected])