International Journal of Informative & Futuristic Research...

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International Journal of Informative & Futuristic Research ISSN: 2347-1697

Volume 5 Issue 9 May 2018 www.ijifr.com

Abstract

Where to invest is the most complicated and confusing issue for the common people. Investment in bank fixed deposit is the most popular avenue of investment but in recent years, rates on bank fixed deposit have been reduced to the extent that investors are in dilemma for investment decision. On the other hand, increasing inflation rate nullifies the return earned on bank fixed deposits. In that case, to accomplish future financial goals, financial planning is required for future needs to be fulfilled in the context of child education, marriage, purchase of new house or car, retirement planning etc. In Indian society, Savings is common as it is traditional custom that is passed on from generation to generation. These small savings must be channelized in a way that gives confidence to the common people to make the correct decision of investment. That means the road map must be design which removes the hurdles between the savings and investment. Investment in mutual funds through SIP route is also gaining ground for its flexibility of investing in smaller proportion. The fall of rates on bank fixed deposits and the rise of mutual funds assets are hand in hand. Technological advancement, use of smart phones with internet has made the investors become well informed about the changes taken place around them. Advertisement on TV channels about ‘Mutual fund sahi hai’ is also influencing the investors to divert their savings towards mutual fund industry. Also performance analysis of the mutual fund industry leads the common people to take the right decision for their savings to be invested.

Mutual Funds are Subject to Investment: Growth

and Stand of Indian Mutual Fund Industry Paper ID IJIFR/V5/ E9/ 015 Page No. 9264-9274 Subject Area Management

Key Words Assets Under Management, Asset Class, Asset Management Company, Flow Of

Fund, SIP Investment

1 Dharmesh J Patel

M.Phil Scholar, School of Commerce and Management, Dr. Babasaheb Ambedkar Open University, Ahmedabad, Gujrat-India

9265

ISSN: 2347-1697 International Journal of Informative & Futuristic Research (IJIFR)

Continuous 57th Edition, Volume - 5, Issue -9, May 2018 Page No. : 9264-9274

Dharmesh J Patel :: Mutual Funds are Subject to Investment: Growth and Stand of Indian Mutual Fund Industry

1. INTRODUCTION

The rate of interest on bank fixed deposit is decreasing day by day. Due to that, return on

bank FD is reducing. On the other hand inflation is increasing rapidly. As a result of that,

actual purchasing power of the money is lowering in present compare to past. Moreover,

insurance on bank FD is only rupees one lakh for whatever amount of FD is made with the

bank. Also people are loosing the confidence on PSU banks for large number of financial

scams coming out day by day in various PSU banks. Overall the investors of the bank FD

are confused in selecting the investment avenue. Also bankers are not reliable completely

in the context of money invested in bank because they are facing tremendous pressure of

cross selling at the cost of bank FD.

Earlier there was a limited access of market information, more dependency on financial

advisors, little knowledge of investment options, lengthy procedure all those problems

were common for all. As a result of that it was general belief that investment in bank FD is

the best option without considering the other options. Majority Investors were believed

that investment in bank FD is the safest avenue of investment with higher liquidity.

Majority of them were having low risk taking attitude.

Now a days, with the advancement of the technological changes, revolution in internet,

wide access of market information, young and dynamic investors having greater

knowledge and resources of investment options have discarded the traditional investment

avenues by considering the risk and return factors. Awareness is increasing about the

investment in mutual funds and also long term return figures disclosed by fund houses

have played a vital role in inflow in mutual fund investment.

Financial reforms introduced, digital India and cashless India campaign, „mutual fund sahi

hai‟ campaign have created an atmosphere that is capable to increase the trust factors

among the investors for investing in equity market through mutual funds. Also more and

more people are investing in mutual funds through direct plan instead of regular plan.

Why? because it is very easy to invest in mutual funds directly from the website of the

fund houses or application based platform available for mobile phones without getting any

headache of too much paper work and documentation. As a result of that there is no need

of financial intermediaries for investment process for investing in mutual funds. Thus, the

introduction of direct plan has been proved game changer for inflow of funds towards the

mutual funds industry. The proportion of direct investments in equity, to the total assets

held by individual investors, was about 7% in March 2018. The impact of all these points

mentioned would be tested by analyzing the performance of mutual fund industry for the

past time starting from 2014 to 2018.

2. OBJECTIVES OF THE STUDY

This study attempts to analyze the growth of mutual fund industry for the last five years

period i.e. March 2014 to March 2018. The objectives of this study are:

i. To analyse Institution Wise Growth of Asset under Management of Indian Mutual

Fund Industry

ii. To analyse the Growth of Assets under Management of Indian Mutual Fund Industry

9266




iii. To analyse Asset Class wise Net resource mobilization by mutual fund

iv. To analyse the growth in total numbers of investor accounts

v. To examine the Total number of schemes under mutual funds

vi. To analyse the stand of Indian Mutual Fund Industry around the world

3. PERFORMANCE OF MUTUAL FUNDS

Table 1: Institution wise AVERAGE ASSETS UNDER MANAGEMENT FOR THE YEAR

ENDED 31 MARCH

Sr.No Name of the Asset Management Company 2014 2015 2016 2017 2018

A BANK SPONSORED

(i) JOINT VENTURES - PREDOMINANTLY INDIAN

1 BOI AXA Investment Managers Private Limited

1,991 3,518 2,385 3,552 5,802

2 Canara Robeco Asset Management Company Ltd.

6,499 7,617 7,968 9,940 12,496

3 SBI Funds Management Private Limited

65,499 74,942 1,06,781 1,57,025 2,17,649

Union KBC Asset Management Company Pvt. Ltd.

2,847 2,726 2,902 - -

TOTAL …………………………... A (i)

76,836 88,803 1,20,036 1,70,517 2,35,947

(ii) JOINT VENTURES - PREDOMINANTLY FOREIGN

1 Baroda Pioneer Asset Management Company Ltd.

8,106 7,172 9,656 10,324 13,022

TOTAL …………………………... A (ii)

8,106 7,172 9,656 10,324 13,022

(iii) OTHERS

1 IDBI Asset Management Ltd.

5,929 7,344 6,835 7,719 10,760

2 Union Asset Management Company Pvt. Ltd.

- - - 3,416 4,305

3 UTI Asset Management Company Ltd.

74,233 92,751 1,06,309 1,36,810 1,54,939

TOTAL …………………………... A (iii)

80,162 1,00,095 1,13,144 1,47,945 1,70,004

TOTAL ……………………………. A (i+ii+iii)

1,65,104 1,96,070 2,42,836 3,28,786 4,18,973

B INSTITUTIONS

(i) INDIAN

1 IIFCL Asset Management Co. Ltd.

168 331 358 412 650

2 LIC Mutual Fund Asset Management Limited

10,584 9,313 13,156 21,475 20,118

TOTAL …………………………... B

10,752 9,644 13,514 21,887 20,768

C PRIVATE SECTOR

(i) INDIAN

1 Edelweiss Asset Management Limited

169 755 1,678 6,917 12,100

2 Deutsche Asset Management (India) Private Ltd.

18,795 22,427

3 Escorts Asset Management Limited

269 253 286 243 231

4 Essel Finance AMC Limited

- - - - 1,540

5 IDFC Asset Management Company Limited

- - - - 69,919

6 IL&FS Infra Asset Management Limited

415 882 923 1,020 1,274

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7 IIFL Asset Management Ltd.

- - 485 565 793

8 India Infoline Asset Management Co. Ltd.

234 346 - - -

9 Indiabulls Asset Management Company Ltd.

1,097 3,590 5,290 10,820 10,714

10 JM Financial Asset Management Limited

6,046 12,231 16,161 13,668 16,365

11 Kotak Mahindra Asset Management Company Ltd.

33,079 41,378 58,495 92,216 1,24,691

12 L&T Investment Management Limited

18,255 22,497 25,945 39,300 65,932

13 Mahindra Asset Management Company Pvt. Ltd.

- - - 1,995 3,368

14 Motilal Oswal Asset Management Company Ltd.

489 2,114 4,689 8,115 17,736

15 Peerless Funds Management Co. Ltd.

4,046 1,302 985 1,062 -

16 PPFAS Asset Management Pvt. Ltd.

340 575 614 696 1,010

17 Quantum Asset Management Company Pvt. Ltd.

356 575 636 962 1,203

18 Reliance Capital Asset Management Ltd.

1,03,542 1,37,124 1,58,408 - -

19 Sahara Asset Management Company Pvt. Ltd.

191 144 99 67 64

20 Shriram Asset Management Co. Ltd.

24 34 37 41 43

21 Sundaram Asset Management Company Limited

16,422 21,875 23,664 29,370 34,306

22 Tata Asset Management Limited

21,954 26,968 31,862 42,619 46,977

23 Taurus Asset Management Company Limited

3,532 4,150 3,949 1,876 509

TOTAL …………………………... C (i)

2,29,255 2,99,220 3,34,206 2,51,552 4,08,775

(ii) FOREIGN

1 BNP Paribas Asset Management India Private Limited 3,446 3,915 5,097 5,891 8,160

2 Franklin Templeton Asset Management (India) Pvt. Ltd. 45,404 70,444 66,947 81,615 1,03,152

3 Goldman Sachs Asset Management (India) Pvt. Ltd.

3,764 8,038 6,101 - -

4 Invesco Asset Management (India) Private Limited

- - - 23,528 26,203

5 Morgan Stanley Investment Management Private Ltd. 2,572 - - - -

6 PineBridge Investments Asset Mgt Co. (India) Pvt. Ltd. 649 - - - -

7 Pramerica Asset Managers Private Limited

2,411 2,309 - - -

8 Mirae Asset Global Investments (India) Pvt. Ltd.

692 1,818 3,133 7,457 15,756

TOTAL …………………………... C (ii)

58,938 86,524 81,278 1,18,491 1,53,271

(iii) JOINT VENTURES - PREDOMINANTLY INDIAN

1 Aditya Birla Sun Life Asset Management Company Ltd. 89,051 1,19,752 1,36,503 1,95,049 2,47,529

2 Axis Asset Management Company Ltd.

16,154 26,624 37,688 57,700 77,326

3 DSP BlackRock Investment Managers Private Limited 31,631 37,838 39,133 64,177 86,326

4 HDFC Asset Management Company Limited

1,12,963 1,61,634 1,75,779 2,37,178 3,00,549

5 ICICI Prudential Asset Mgmt. Company Limited

1,06,822 1,48,559 1,75,881 2,42,961 3,05,739

6 IDFC Asset Management Company Limited

41,349 51,715 52,129 60,636 -

7 Religare Invesco Asset Management Company Pvt. Ltd. 14,496 21,009 19,579 - -

8 Reliance Nippon Life Asset Management Limited

- - - 2,10,891 2,44,904

TOTAL …………………………... C (iii)

4,12,466 5,67,131 6,36,692 10,68,592 1,262,373

(iv) JOINT VENTURES - PREDOMINANTLY FOREIGN

1 HSBC Asset Management (India) Private Ltd.

7,659 8,242 7,274 8,812 10,261

2 ING Investment Management (India) Private Ltd.

564 - - - -

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(Rs. in crores)

(Source: AMFI)

From above table, it is observed that institution wise average assets under management at

the end of 31 March are increasing positively with upward trend. Average assets under

management under the categories of bank sponsored and private sector have increased

with positive growth in all years starting from 2014 to2018 where as institutions category

shows mix trend. Investment in mutual funds is increasing year by year positively that

shows the confidence of the investors in terms of risk and return of the mutual funds. Total

assets under management are more than double in 2018 compare to 2014.

Table 2: Asset class wise disclosure of AAUM for the year ended 31 March

(Rs. in crores)

Category 2014 2015 2016 2017 2018

Income

4,42,376 5,16,086 5,68,700 7,78,760 7,95,972

Infrastructure Debt Fund 583 1,213 1,281 1,432 1,924

Equity (other than ELSS) 1,56,688 3,00,631 3,38,564 4,54,673 6,92,253

Balanced

16,364 26,044 40,906 84,526 1,88,099

Liquid/ Money Market 2,44,737 2,77,428 3,26,880 3,94,048 4,56,241

90

51

20

11

88

69

0

13

53

44

3

18

29

58

4

23

05

21

2

2014 2015 2016 2017 2018

3 JPMorgan Asset Management India Pvt. Ltd.

16,248 15,641 6,414 - -

4 Principal Pnb Asset Management Co. Pvt. Ltd.

4,134 6,218 5,242 5,347 7,196

TOTAL …………………………... C (iv)

28,605 30,101 18,930 14,159 17,457

(v) JOINT VENTURES - OTHERS

1 DHFL Pramerica Asset Managers Private Limited

- - 25,987 26,117 23,595

TOTAL …………………………... C (v)

0 0 25,987 26,117 23,595

TOTAL ……………………………. C

(i+ii+iii+iv+v)

7,29,264 9,82,976 10,97,093 14,78,911 18,65,471

TOTAL ……………………………. (A+B+C) 9,05,120 11,88,690 13,53,443 18,29,584 23,05,212

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Gilt

6,864 11,890 17,145 18,007 15,547

Equity - ELSS 23,928 38,537 38,788 53,505 77,849

GOLD ETF

9,099 6,996 6,335 5,643 4,860

Other ETF 1,568 7,374 12,926 37,141 70,933

Fund of Fund investing overseas 2,913 2,491 1,918 1,849 1,534

Total 9,05,120 11,88,690 13,53,443 18,29,584 23,05,212

(Source: AMFI)

Above table shows the asset class wise disclosure of average assets under management for

the year 2014 to 2018 ended on March 31. It is observed that Income funds are having the

growth of 180% from 2014 to 2018 with upward trend year by year. Infrastructure debt

fund has grown with 330% from 2014 to 2018 with upward trend year by year. Equity

(other than ELSS) has grown with 442% from 2014 to 2018 with upward trend year by

year. Balanced fund has grown with 1149% from 2014 to 2018 with upward trend year by

year. Liquid/ Money Market fund has grown with 186% from 2014 to 2018 with upward

trend year by year. Gilt fund has grown with 227% from 2014 to 2018 with upward trend

year by year upto 2017 and downward trend for 2018. Equity – ELSS fund has grown

with 325% from 2014 to 2018 with upward trend year by year. GOLD ETF fund has

grown with 53% from 2014 to 2018 with downward trend year by year. Other ETF fund

has grown with 4524% from 2014 to 2018 with upward trend year by year. Fund of Fund

investing overseas has grown with 53% from 2014 to 2018 with downward trend year

by year.

All assets class except Gold EFT and Fund of Fund investing overseas are on the track of

positive growth starting from 2014 to 2018 consecutively. It is also observed that Gilt fund

shows upward trend from 2014 to 2017 but in 2018 it is on downward track.

The proportionate share of each category based on growth from 2014 to 2018 can be

shown as under:

2% 4%

6%

15%

3%

3%

4%

1%

61%

1%

Income

Infrastructure Debt Fund

Equity (other than ELSS)

Balanced

Liquid/ Money Market

Gilt

Equity - ELSS

GOLD ETF

Other ETF

Fund of Fund investing

overseas

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Table 3: Asset Class wise Net Inflows / Outflows for the year ended March 31

(Rs. in crores)

Category 2014 2015 2016 2017 2018

Income

40,546 4,875 14,738 1,20,633 -5,851

Infrastructure Debt Fund 863 188 403 - 340

Equity (other than ELSS) -7,627 68,121 67,611 60,270 1,56,753

Balanced

-1,986 9,826 19,743 36,610 89,757

Liquid/ Money Market 24,099 9,782 17,109 95,826 -2,936

Gilt

-1,868 7,712 759 -3,306 -3,277

Equity - ELSS -1,641 2,908 6,413 10,097 14,316

GOLD ETF

-2,294 -1,475 -903 -775 -835

Other ETF 2,890 2,251 8,724 24,054 23,958

Fund of Fund investing overseas 1,101 -900 -417 -360 -428

Total 54,083 1,03,288 1,34,180 3,43,049 2,71,797

(Source: AMFI)

Above table shows the asset class wise net inflows and outflows of fund for the year 2014

to 2018 ended on March 31. It is observed that Income fund shows net inflows from 2014

to 2017 with mix trend of upward and downward, while in 2018 it shows net outflows.

Infrastructure debt fund shows net inflows with mix trend of upward and downward

except 2017. Equity (other than ELSS) shows net outflows for 2014 and net inflows from

2015 to 2018 with mix trend of upward and downward. Balanced fund shows net outflows

for 2014 and net inflows for 2015 to 2018 with upward trend year by year. Liquid/ Money

Market fund show net inflows from 2014 to 2017, while in 2018 it shows net outflows.

Gilt fund shows mix trend of upward and downward in net inflows and net outflows.

Equity – ELSS fund shows net outflows for 2014 and net inflows for 2015 to 2018 with

upward trend year by year. GOLD ETF fund shows net outflows from 2014 to 2018 with

overall downward trend year by year. Other ETF fund shows net inflows from 2014 to

2018 with mix trend of upward and downward. Fund of Fund investing overseas shows

net inflows for 2014 and net outflows from 2015 to 2018 with overall downward trend

year by year.

Trends in Equity Investment through Mutual Funds

-50000

0

50000

100000

150000

200000

2014 2015 2016 2017 2018

Equity (other than ELSS)

Balanced

Equity - ELSS

Other ETF

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By analyzing net inflows and outflows data, Equity – ELSS fund shows positive growth

starting from 2014 to 2018. It clearly indicates that tax paying investors are diverting their

funds towards the Equity-ELSS among other options. This is the clear sign that Equity-

ELSS is gaining the ground gradually. Net inflows in Equity (other than ELSS), Balanced

fund and Other ETF data indicate that equity investment is increasing rapidly with positive

image of reliable avenue of investment.

Table 4: Total Number of Investor Accounts for the year end March 31 (in Crores)

Year Mar-14 Mar-15 Mar-16 Mar-17 Mar-18

Investor Accounts 3.95 4.17 4.77 5.54 7.13

(Source: AMFI)

Since March 2014, there is an increase in investor accounts from 3.95 crores to 7.13 crores

in March 2018. Mutual funds investor‟s accounts are increase rapidly which is a good sign

for mutual fund industry as investors are more confident than earlier for accepting the

mutual funds as a reliable investment avenue.

Table 5: Total Number of Scheme for the year ended March 31

Category 2014 2015 2016 2017 2018

Income

1077 1245 1730 1575 1258

Infrastructure Debt Fund 4 4 7 7 9

Equity (other than ELSS) 311 379 413 420 442

Balanced

30 25 28 30 31

Liquid/ Money Market 53 52 53 52 52

Gilt

44 45 41 41 38

Equity - ELSS 52 55 60 64 72

GOLD ETF

14 14 13 12 12

Other ETF 26 34 45 51 56

Fund of Fund investing overseas 27 31 30 29 28

0

2

4

6

8

Mar-14 Mar-15 Mar-16 Mar-17Mar-18

3.95 4.17 4.77

5.54

7.13

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Total 1638 1884 2420 2281 1998

(Source: AMFI)

Above table shows the asset class wise number of schemes for the year 2014 to 2018

ended on March 31. It is observed that Income fund, Infrastructure debt fund, Balanced

fund, Liquid/ Money Market fund , Gilt fund, GOLD ETF fund and Fund of Fund

investing overseas show variation in number of schemes in different years either increase

or decrease. Equity (other than ELSS), Equity (ELSS) and Other ETF fund show positive

increase in number of schemes year by year.

Equity (other than ELSS), Equity (ELSS) and other ETF are the scheme categories under

which number of schemes show positive and upward trend. It is the clear indication that

more and more investors are investing in these funds. That is why the number of schemes

is increasing year by year.

Global Assets under Management and India

(Source: IIFA)

There is tremendous scope of the growth of Indian mutual fund industry compare to rest of

the world. Huge market is yet to be penetrated. In a report “Asset & Wealth Management

Revolution: Embracing Exponential Change”, PwC anticipates that global Assets under

Management set to rise to $145.4 trillion by 2025.

22146986

1914949

1292023

1238039

2144052

1688981

1759449

181762

2313588

2312051

2873630

4988625

923269

451886

307387

0 5000000 10000000 15000000 20000000 25000000

US

UK

Canada

Brazil

Australia

China

Japan

South Africa

France

Germany

Ireland

Luxembourg

Netherlands

Republic of Korea

India

TOTAL NET ASSETS AROUND THE GLOBE FOR THE YEAR ENDED 31 MARCH 2018 (Millions of US dollars)

9273




4. CONCLUSION

Stable government, rapid developing stage of the economy, favorable business

development polices of the government, global positive factors, strong growth

fundamentals, financial reforms undertaken by the government all these factors working

together increase the confidence of the investors who are the source of savings and

investment in particular economy. Presently India is witnessed of this transformative

stage. All these positive sentiments lead the investors to flow their savings towards

investment in financial assets for good return with optimistic attitude. The reflection of all

these factors clearly points out in Graphical data that shows the growth of investment in

mutual funds year after year.

With introduction of direct Plan of investing in mutual funds and decreasing rates on bank

deposits, the growth in assets size of mutual funds is expanding. Also questionable role of

PSU banks in the context of High NPA, low financial performance, banking scams

indirectly fosters the investors to start searching another planet for better life in terms of

financial goals. Online investment in direct plans of mutual funds are gaining ground for

some reasons like no intervention of financial intermediaries, paperless procedure, no need

to pay extra charges in terms of transaction charges and commission. As it is said that

India is a country of Young population, new generation of investors are familiar and used

to online investment at their own convenience. Also our country is passing from

transformation process in terms of digital India, cashless India so online transactions in

mutual funds are more and more popular with the benefit of no need to pay any extra cost

to any intermediaries. One another reason is anybody can participate in mutual funds with

small savings by SIP. This SIP route has played a crucial role in channelizing the small

monthly savings into financial assets. Less earning as well as high earning households

both are comfortable with SIP route in mutual fund investment.

Investment in mutual funds is subject to market risk but still it is an attractive investment

avenue for the new generation investors as well as traditional investors. Investors are fully

aware about the risk involved and return expected from such investment and that‟s why

47.59

4.11 2.78 2.66 4.61

3.63

3.78

0.39

4.97

4.97

6.17

10.72

1.98 0.97 0.66

TOTAL NET ASSETS AROUND THE GLOBE FOR THE YEAR ENDED 31 MARCH 2018 (in %) US

UK

Canada

Brazil

Australia

China

Japan

South Africa

France

Germany

Ireland

Luxembourg

Netherlands

Republic of Korea

India

9274




mutual funds are getting popular. Despite introduction of LTCG taxes, mutual funds are

still attractive for investment.

5. REFERENCES [1] https://www.amfiindia.com, accessed on May 15, 2018

[2] https://press.pwc.com, accessed on May 22, 2018

[3] https://www.iifa.ca, accessed on May 22, 2018

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