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MFs add Rs 1.24 trn to asset base in 2018 on SIP flows despite choppy mkts

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Dion Global

07 Jan 2019

Mutual funds have added a staggering Rs 1.24 trillion to their asset base in 2018 assisted by a consistent increase in SIP flows and a robust participation of retail investors despite volatile markets.

The asset under management (AUM) of the industry grew by 5.54 per cent or Rs 1.24 trillion to Rs 23.61 trillion at the end of December 2018, up from Rs 22.37 trillion at the end of December 2017, latest data available with the Association of Mutual Funds in India (Amfi) showed.

The year 2018 also marked the sixth consecutive yearly rise in the industry's AUM after a drop in the two preceding years.

The pace of growth, however, declined for the asset size in 2018 as compared to the previous year. The industry saw 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 because of the credit crunch, exposed mutual funds to ill-liquid debt funds worth lakhs of crores. This coupled with volatile markets could be some of the reasons for a slower growth in assets base last year.

Quantum Mutual Fund MD and CEO Jimmy Patel attributed the rise in mutual funds' asset base in 2018 to strong participation of retail investors that continued to remain buoyant with their SIP investments despite rising crude oil prices, rupee depreciation and stock market volatility.

In addition, markets regulator Sebi's efforts on investor education, as well as Amfi's 'Mutual Fund Sahi Hai' campaign, also helped the industry, he added.

Fund houses believe that an uptrend is expected in 2019 too as large amount of flow is expected through SIP (Systematic Investment Plan) route as it helps in rupee cost averaging and also in investing in a disciplined manner without worrying about market volatility and timing the market.

"Among the factors that will help such a move in 2019 is that an ever larger proportion of the flow is through SIP which adds to the existing AUM. Also, the number of folios that are added on a monthly basis continue to be robust indicating that more and more new investors are investing through mutual funds.

"Increased geographical penetration and technology may also lead to greater participation in MFs," Essel Mutual Fund CIO Viral Berawala said.