Did you make money out of mutual funds in 2018?
Mutual funds have added Rs 3 lakh-cr to their assets base in 2018! What si even more important is that it is eyeing more traction in the new year! All of this, despite volatile markets! This addition to the assets follows consistent rise in the SIP inflows and a strong participation of retail investors. Yes, retail investors have really fattened up the MFs in 2018.
The large-scale adoption of SIPs, especially by retail investors, has helped the mutual funds this year. A sharp rise in SIPs also that shows more people moving away from the concept of large lump-sum investments. Fund houses have garnered over Rs 80,600 crore through SIPs. The industry added close to 10 lakh SIP accounts each month on an average in 2018 with SIP collection on a monthly basis increasing to over Rs 6,700 crore this year from more than Rs 4,950 crore in 2017.
The data available with the Association of Mutual Funds in India (Amfi) showed that the asset under management (AUM) of the industry rose by 13 per cent to Rs 24 lakh crore in 2018 by November-end itself, up from Rs 21.26 lakh crore at the end of December 2017. The is likely to continue in the new year also. Here are the key points:
The investor count in mutual funds is also estimated to have grown by over 1.3 crore during the year. The industry experts, however, believe that the final AUM figure at December-end might be slightly lower than that of November as there could be a dip in liquid funds due to a quarter-end phenomenon. "Keep in mind the quarter-end trends and the advance tax pay-out, we expect the industry AUM to close around Rs 23-23.5 lakh crore in 2018," Kotak Mahindra Asset Management Company's National Head (Sales and Distribution Alliances) Manish Mehta told PTI. Image source: Pixabay
The pace of growth declined for the asset size in 2018 as compared to the last year, which had witnessed a surge of 32 per cent in the AUM or an addition of over Rs 5.4 lakh crore in 2017. The IL&FS default and the consequent blow to the NBFC sector due to credit crunch exposed mutual funds to lakhs of crore worth of ill-liquid debt funds. This coupled with volatile markets could be some of the reasons for a slower growth in assets base this year. Image source: Pixabay
Going into 2019, the fund houses expect the industry would witness robust growth as the sector is yet to tap its full potential, said PTI report, adding that several measures taken by the regulator Sebi will help in increasing the penetration of mutual funds. Image source: Pixabay
"A larger proportion of the flow through SIPs (systematic investment plans), which will add to the existing AUMs. Also, the number of folios that are added on a monthly basis expected to robust indicating that more and more new investors will invest through mutual funds. Increased geographical penetration and technology may also lead to greater participation in mutual funds in next year," Essel Mutual Fund CIO Viral Berawala told PTI. Image source: Pixabay
The factors that will drive the growth in 2019 include the untapped potential, rising investor awareness about mutual funds as an investment alternative and a spirited promotion campaign by the Amfi. Image source: Pixabay
The industry's AUM had crossed the milestone of Rs 10 lakh crore for the first time in May 2014, and in a span of about four-and-a-half years, the asset base is up more than two-fold to Rs 24 lakh crore in November-end 2018, crossing Rs 25 lakh crore mark also at the end of August this year. The year 2018 would mark the sixth consecutive yearly rise in the industry AUM after a drop for two preceding years. Image source: Pixabay
Another highlight of 2018 was a surge in the number of investor accounts and equity folios contributed tremendously to this growth. Overall, investor folios climbed by 1.32 crore to 8 crore while retail investor accounts -- defined by folios in equity, ELSS and balanced categories -- alone grew by 1.25 crore to 6.7 crore. Besides, equity and equity-linked saving schemes (ELSS) attracted an impressive inflow of Rs 1.15 lakh crore. Image source: Pixabay