Keep risk appetite in mind as Mutual Fund’s AUM touch all time high
05 May 2017
Priyanka Sharma
New Page 1
The Mutual Fund market in India is on a roll with burgeoning investment
into the industry, especially from the retail segment. If you have invested in equity, the
question you are probably worried about right now is whether you should hold your ground,
sell and book profits or invest more. The increasing investments into the MF industry can
be largely attributed to a steadily increasing interest among the average investor, who
wants to invest for long-term, in a systematic way. And so, more investors than before
have invested into Mutual Funds via the SIP route.
Here is a look at some data. Overall, the Average Assets Under
Management (AAUM) of the Indian Mutual Fund industry for the month of March 2017 stood at
Rs 18.58 lakh crore. According to data released by the Association of Mutual Funds in
India, the AUM of the Indian MF Industry has grown from Rs 3.26 lakh crore as on March 31,
2007 to Rs 17.55 lakh crore as on March 31, 2017. The increase is more than five times in
a 10 year period.
Encouraging news for the home Mutual Fund industry doesn’t stop
here. The MF industry’s AUM has tripled in the last 5 years from Rs 5.87 lakh crore
as on March 31, 2012 to Rs17.55 lakh crore as on March 31, 2017. Data showed that the
total number of accounts, or folios as per Mutual Fund parlance, as on March 31, 2017
stood at 5.54 crore, while the number of folios under equity, ELSS and balanced schemes,
wherein the maximum investment is from retail segment, stood at Rs 4.44 crore.
From an investor point of view, experts say that the numerous long-term
drivers in the Indian market with the support of government-backed structural reforms can
provide attractive growth earnings over the medium term. However, the general view is that
even when the MF industry is on a high, an investor should invest strictly in alignment
with his financial goals and risk appetite and not according to market conditions.
In the recent past, more than half of the increase in average assets
was seen in the top 5 fund houses. The average assets of major Mutual Funds, including
ICICI Prudential, and Birla Sun Life, were up by around Rs 2.89 lakh crore. Data also
showed that of the 40 fund houses, only four fund houses saw a fall in their average
assets under management for January-March 2017.
There has been obvious shift in the investment preferences of the
retail investor. The average investor is increasingly becoming financially educated and is
aware about systematic investment plan. Indian Mutual Funds have currently about 1.35
crore SIP accounts through which investors regularly invest in Indian Mutual Fund schemes.
The growing popularity in SIP has supported in rupee cost averaging and also in investing
in a disciplined manner without worrying about market volatility and timing the market.
AMFI data shows that the MF industry added about 6.26 lakh SIP accounts each month on an
average during the current financial year, with an average SIP size of about Rs 3,200 per
SIP account.
This trend of increased retail investments in MFs has been visible for
some time. Last year in December too, equity MFs saw an inflow of more than Rs 10,000
crore; this was the highest investment in 18 months and was said to be largely driven due
to investor optimism.
Month
|
SIP contribution (in Crore)
|
April ‘16-March ‘17
|
43,921
|
March ‘17
|
4,335
|
February ‘17
|
4,050
|
January ‘17
|
4,095
|
December ‘16
|
3,973
|
November ‘16
|
3,884
|
October ‘16
|
3,434
|
September ‘16
|
3,698
|
August ‘16
|
3,497
|
July ‘16
|
3,334
|
June ‘16
|
3,310
|
May ‘16
|
3,189
|
April ‘16
|
3,122
|
Source: Association of Mutual Funds in India
An investor foraying into equities should have a time of time frame of
at least 5 years and should invest systematically. Also, diversified equity funds can be
part of the core portfolio of all investors.
There are enough opportunities in the market at current levels and NAV
returns for most funds are likely to be higher over the indices in the longer term. At
times of heightened investing into the Mutual Funds industry, investors should generally
hold on to their existing investments exposure but within the earmarked asset allocation
and work their way according to their risk appetite.