Monthly investments from systematic investment plans (SIPs), which had dipped to below Rs 1,000 crore in 2008, has now hit a record high of Rs 4,500 crore. Officials expect SIP investments to only go up from current levels.
Kaustubh Belapurkar, director (fund research) at Morningstar India, said, “Impetus should be on increasing the number of individual investors. It will help in deepening and broadening the market. Today we are at a stage where the US was in the early 1980s. Investors are maturing and not reacting in knee-jerk way to events like Brexit or demonetisation. It suggests MF investors are making long-term investment."
The recent trends may give the industry hope but the growth has come at a time when the stock markets
have done well. Experts say the strength could be tested if the markets
go into a prolonged correction phase.
"Market cycle is something which no one can predict. Though this projection is based on the 20-plus CAGR in the past few years, the same growth can't be taken for granted. However, given the momentum of flows, investors coming in from smaller cities and towns and the expected positive economic growth in the years ahead, reaching targets by 2025 is possible,” said G Pradeepkumar, CEO, Union Mutual Fund.
India currently has about 86,000 MF distributors. Following the 2008 financial crisis, the distributor count had dropped from 100,000 to 40,000 due to weak market conditions and tightening of regulations. Industry players say there are only about 12,000 active distributors, which may not be enough to cater to the needs of new investors.