emphasizes rising digital confluence & encouraging fixed income investments
Mumbai, August 23, 2018: Association of Mutual Funds in India (AMFI), the trade association of Asset Management Companies (AMCs) of all Mutual Funds in the country, at its second edition of the annual Mutual Fund Summit today discussed how the next phase of growth in Mutual Funds would come from – Greater adoption of digital technology ‘#thinkdigital’ in intermediation and customer service; and by developing fixed income segment as the retail investment avenue for the large pool of small investors across the country.
These two initiatives would form the corner stone of AMFI’s key focus areas and would drive the growth for the Indian Mutual Fund Industry across the country over the period of next 12 months.
In line with this focus, the second AMFI CRISIL Fact Book for 2018 was unveiled by Shri Ajay Tyagi, Chairman, SEBI, as the Chief Guest, with the theme aptly titled, “Digital evolution – Can technology be the propelling factor for the industry?”
The annual AMFI Mutual Fund Summit is aimed at channelling discussions about the industry’s strengths and opportunities, celebrating achievements over the past year and addressing challenges, for taking the mutual fund industry to newer heights. The theme of the second edition of the event is to define the roadmap for expansion of the mutual fund industry and enhance the ease of doing business by leveraging on digital technology. The event, also celebrated 25 years of private sector mutual funds in the country.
Shri Ajay Tyagi, Chairman, Sebi, in his key note address said, “Indian mutual fund industry needs to think of new & innovative ways towards contributing to the deepening of the bond market. In this context use of bouquet of products like debt ETFs and bond index tracking funds could perhaps be considered for development.”
He added, “I feel the time is now ripe for the industry to concentrate on B-30 centres and perhaps B-50 centres. There is a need for accelerated and faster growth in geographical reach of MFs and bring in long term money from smaller towns. This is also necessary given that there is overall policy focus to channelize more of household savings towards financial assets. I hope that the dispensation to allow AMCs to charge additional TER of 30 bps of new inflows from beyond top 30 cities would facilitate in further deepening the industry”.
Speaking on the occasion, Shri A Balasubramanian, Chairman, AMFI said, “I am happy to emphasise that as private MF industry completes 25 years, the industry asset base too is clocking new heights and is at a close distance of touching an asset base of INR 25 lac crores. Taking fixed income products to retail mass is the next journey that we are aiming at. AMFI’s Mutual Fund Sahi Hai Campaign is now being targeted towards building fixed income as an asset class.’’
‘’On the digital front, I would also like to share that, AMFI is collaborating with all the AMC’s to re-energise the industry platform – MF Utility (MFU). In fact, all the AMC CEOs have in principle agreed to re-capitalize the MFU and help in its development to emerge as an industry-leading digital platform,’’ Mr Balasubramanian said.
On the cost structures, Mr Balasubramanian said, any further reduction in expenses would pave path for other industry players such as PMS, AIFs and also ULIP products which have differential cost structures to have an edge over mutual funds and become more attractive for the intermediaries. This may act as a deterrent for the Mutual Fund Industry and eat away the share of savings pool.’’
Shri Deepak Parekh, Chairman of HDFC Ltd., the Guest of Honour at the event while sharing his vision for the Indian mutual fund industry emphasised on important trends including doubling of AAUMs to INR 50 Lakh crore in the next five years, inculcating ethical and investor-focussed approach towards distribution, digital disruption and protection of customer data, orienting investor approach towards long term investing, and also nurturing talent for heralding bright future for the Indian Mutual Fund industry.
Shri N S Venkatesh, Chief Executive, AMFI said: ‘’Mutual Funds are playing a truly multi-faceted role in meeting various financial needs of Indians. Sebi is playing a pivotal role with its constant guidance, as always, which is helping provide a major thrust for the mutual fund industry. Mutual Funds are now perfectly placed to help channelize the savings of individual investors to Indian financial markets and help power the growth of the emerging new India.’’
Smt Usha Thorat, Former Deputy Governor, RBI spoke on strengthening the debt market, while Shri Vijay Shekhar Sharma, Founder & CEO of Paytm, spoke at the summit on, “Leveraging Technology for the next phase of growth”.
According to the latest edition of the AMFI-CRISIL Fact Book, the ratio of the mutual fund industry’s assets under management (AUM) to bank deposits has grown to a healthy 22% as of March 2018, up from mere 13% as of March 2016. During the period of March 2017 to June 2018, the average AUM grew to INR 23.4 lakh crore from INR 18.3 lakh crore, a growth of 39%. The average number of folios too grew by 35% or an addition of more than 1.92 crore folios. The number of folios increased to 7.46 crore of which 2.28 crore portfolio are SIP portfolios, from earlier 5.54 crore folios.
The report goes on to mention that the mutual fund industry has been an early adopter of technology and this has paid rich dividends and can be seen in the rapid influx of digital money into the industry; the share of gross flows through digital mode has grown from just about than 0.5% two years back to nearly 10% as of June 2018.
The full day event saw eminent CEOs and top management personnel from various fund houses and representatives from distribution partners and associations discuss ways in which customer base could be broadened.