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

Representative image

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.


Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel