Mutual funds in India

From Wikipedia, the free encyclopedia

The first introduction of a mutual fund in India occurred in 1963, when the Government of India launched the Unit Trust of India (UTI).[1] Mutual funds are broadly categorised into three segments: equity funds, hybrid funds, and debt funds.

Mutual fund statistics[edit]

  • The total Assets Under Management (AUM) of the Indian mutual fund industry as of December 31, 2023, stood at a staggering 50.78 trillion (US$640 billion). This is a significant milestone, marking over a six-fold increase compared to the 8.26 trillion (US$100 billion) recorded in December 2013.[2]
  • According to SEBI, during FY 2022–23, 73% of mutual fund units were redeemed within 2 years of investment. Only investments in 3% of the units continued for more than 5 years.[3][4]
  • According to the S&P SPIVA Report FY2022, over a 10-year period, approximate 68% of the large-cap actively managed funds failed to beat their respective benchmarks, and over 50% failed to beat their benchmarks in the mid- and small-cap segments.[11] Within the ELSS funds category, over 60% failed to beat their respective benchmarks over 10 year period.[11] Globally, over long periods of time, passively managed funds consistently outperform actively managed funds.[12][13][14]
Mutual Fund Units Redeemed Data[3][4]
Holding Period Units redeemed in FY22 Units redeemed in FY23
0 - 1 years 56.83% 50.11%
1 – 2 years 15.14% 23.04%
2 – 3 years 5.03% 9.81%
3 – 5 years 20.41% 13.96%
More than 5 years 2.59% 3.09%

Mutual fund category breakup[edit]

  • AUM of Equity funds – 20.33 lakh crore (US$250 billion) (November 2023)[15]
  • AUM of Hybrid funds – 6.90 lakh crore (US$86 billion) (January 2024)[16]
  • AUM of Debt funds – 11.97 trillion (US$150 billion) (March 2020)[17]

2021 liquidity crisis and regulatory actions[edit]

In April 2020, Franklin Templeton India unexpectedly wound up six credit funds with assets of close to $4 billion, citing a lack of liquidity amid the coronavirus pandemic. These funds had large exposure to higher-yielding, lower-rated credit securities. The Securities and Exchange Board of India (SEBI) conducted a probe into this sudden closure and found “serious lapses and violations”. As a result, in June 2021, SEBI barred Franklin Templeton Mutual Fund from launching any new debt schemes for two years. The regulator also ordered the fund house to refund investment and advisory fees, along with interest, of more than 5 billion rupees, and fined the global giant another 50 million rupees.[18][19][20][21]

Franklin Templeton said it strongly disagreed with the SEBI’s order and planned to appeal against it. The decision to wind up the schemes “was taken with the sole objective of preserving value for unitholders”, a spokesperson said. However, the closure of these funds sparked panic withdrawals from other Franklin Templeton schemes as well as credit funds of other asset managers, leading to a storm on social media and court cases by distraught investors.[21][18][20]

Market segment[edit]

Despite being available in the market,[22] a recent report on Mutual Fund Investments in India published by research and analytics firm, Boston Analytics, suggests investors are holding back from putting their money into mutual funds due to their perceived high risk and a lack of information on how mutual funds work.[23] There are 46 Mutual Funds as of June 2013.[24] In 2019, Asset under management (AUM) of the mutual fund industry rose by 13% to 24 trillion in 2018 by November[25] The total assets under management (AUM) has surged by around 23.43% in 2023. The Assets base in January 2023 was Rs.40.70lakh crores, which rose to Rs.50.24 lakh crore in Nov, 23.[26]

Average assets under management[edit]

Assets under management (AUM) is a financial term denoting the market value of all the funds being managed by a financial institution (a mutual fund, hedge fund, private equity firm, venture capital firm, or brokerage house) on behalf of its clients, investors, partners, depositors, etc.
The average assets under management of all mutual funds in India for the quarter Dec 2015 to Mar 2016(in ₹ Lakh) is given below:[27][28] or [29]

Mutual Fund Name Total Schemes QAAUM AUM (₹ Lakh.) Prev QAAUM (₹ Lakh.) Inc/Dec (₹ Lakh.) Percentage
Axis Asset Management Company 263 3776454.37 3456348.88 320105 9%
Baroda Pioneer Asset Management Company 111 965630.33 925542.12 40132 4%
Birla Sun Life Asset Management Company 806 13678510.7 13684493.34 5312 0%
BNP Paribas Asset Management Company 114 509706.79 500795.21 9209 2%
BOI AXA Asset Management Company 76 238501.41 242767.91 2887 1%
Canara Robeco Asset Management Company 142 804326.86 751779.86 52627 7%
Pramerica Investment Management 8 27698 17194 10504 61%
DHFL Pramerica Asset Management Company 491 2598683.24 216345 -80979 -37%
DSP Asset Management Company 398 4015131.25 3918267.17 96865 2%
Edelweiss Asset Management Company 70 167774.29 163236.28 4538 3%
Escorts Asset Management Company 60 28559.18 29222.27 -663 -2%
Franklin Templeton Asset Management Company 200 6784076.49 7172216.54 -384257 -5%
Goldman Sachs Asset Management Company 18 610139.99 685179.35 -75039 -11%
HDFC Asset Management Company 1173 17608456.44 17866622.24 -256390 -1%
HSBC Global Asset Management Company 155 790382.19 837762.82 -47151 -6%
ICICI Prudential Asset Management Company 1529 17596397.6 17223699 390751 2%
IDBI Asset Management Company 92 689266.37 756428.17 -67162 -9%
IDFC Asset Management Company 453 5228379.46 5486421.83 -249600 -5%
IIFCL Asset Management Asset 1 35797.56 34293.89 1504 4%
360 ONE Asset Management Limited 18 48543.76 42203.84 6340 15%
IL & FS Infra Asset Management Company 12 92296.34 90029.5 2267 3%
Indiabulls Asset Management Company 56 528955.04 491675.45 37279 8%
JM Financial Asset Management 179 1616090.42 1586776.74 29313 2%
Kotak Mahindra Asset Management Company 431 5873108.27 5513383.02 362464 7%
L&T Asset Management Company 246 2594480.1 2505850.82 89990 4%
LIC Nomura Mutual Fund Asset Management Company 176 1315562.4 1238408.04 92942 8%
Mirae Asset Management Company 55 313272.14 280239.04 33101 12%
Nippon India Mutual Fund 1015 15936949.34 15787817.36 152561 1%
Motilal Oswal Asset Management Company 31 468921.13 455222.64 14103 3%
Peerless Asset Management Company 57 98524.1 102441.7 -3917 -4%
PPFAS Asset Management Company 1 61357.1 62931.88 -1575 -3%
Principal Asset Management Company 123 528106.02 587875.66 -59770 -10%
Quantum Asset Management Company 15 66093.04 65531.63 561 1%
Religare Global Asset Management Company 267 1959617.91 1988459.31 -28622 -1%
Sahara Asset Management Company 68 9929.16 11002.32 -758 -7%
SBI Asset Management Company 652 10732737.36 10058453.69 672760 7%
Shriram Asset Management Company 4 3716.98 3711.53 5 0%
Sundaram Asset Management Company 479 2366370.94 2187696.57 185302 8%
Tata Asset Management Company 324 3186223.17 3155590.09 26752 1%
Taurus Asset Management Company 65 394858.04 350334.19 44524 13%
Union KBC Asset Management Company 60 290228.21 273213.25 17015 6%
UTI Asset Management Company 1220 10630921.82 10612903.52 16124 0%
Gross 11856 135912187.2 132170477.1

Mutual Fund Acquisitions[edit]

Seller Acquired By Year
Pioneer ITI MF 000Franklin Templeton 02002
Zurich India AMC 000HDFC MF 02003
Alliance Capital MF 000Birla Sunlife 02005
Standard Chartered 000IDFC 02008
AIG Global Investment Group MF 000PineBridge MF 02011
Benchmark Mutual Fund 000Goldman Sachs 02011
Fidelity 000L&T Finance 02012
Morgan Stanley's MF 000HDFC MF 02013
PineBridge MF 000Kotak MF 02014
ING Mutual Fund 000Birla Sunlife 02014
Daiwa AMC 000SBI MF 02013
Goldman Sachs 000Reliance MF 02015
Deutsche 000Pramerica 02015
JP Morgan 000Edelweiss 02016
Peerless 000Essel 02017
Escorts 000Quant 02018
Religare Invesco 000Invesco AMC 02018
Reliance MF 000Nippon India[30] 02019
Principal 000Sundaram 02021
Essel 000Navi MF 02021
L&T Asset Management Company 000HSBC Global Asset Management Company 02022
IDFC Asset Management Company 000Bandhan Financial Holdings Limited 02023
India Bulls Asset Management Company 000Groww MF 02023
IDBI Asset Management Company 000LIC Nomura Mutual Fund Asset Management Company 02023

See also[edit]

References[edit]

  1. ^ "MF History http://www.amfiindia.com/research-information/mf-history". Association of Mutual Funds of India. {{cite web}}: External link in |title= (help)
  2. ^ https://www.amfiindia.com/indian-mutual
  3. ^ a b "SEBI | Annual Report 2021-22".
  4. ^ a b Agarwal, Nikhil (24 May 2023). "50% mutual funds get redeemed within a year. Is long-term investing dead?". The Economic Times.
  5. ^ "Reserve Bank of India - RBI Bulletin".
  6. ^ https://www.business-standard.com/markets/mutual-fund/mutual-funds-attract-6-of-household-savings-in-fy23-shows-rbi-data-123092000972_1.html
  7. ^ "Reserve Bank of India - Household Financial Savings".
  8. ^ "Reserve Bank of India - RBI Bulletin".
  9. ^ https://www.business-standard.com/markets/mutual-fund/mutual-funds-attract-6-of-household-savings-in-fy23-shows-rbi-data-123092000972_1.html
  10. ^ "Reserve Bank of India - Household Financial Savings".
  11. ^ a b https://www.spglobal.com/spdji/en/documents/spiva/spiva-india-scorecard-year-end-2022.pdf
  12. ^ "Mutual Funds That Consistently Beat the Market? Not One of 2,132". New York Times. 2 December 2022. Retrieved 21 August 2023.
  13. ^ Choi, James J. (2022). "Popular Personal Financial Advice versus the Professors". Journal of Economic Perspectives. 36 (4): 167–192. doi:10.1257/jep.36.4.167. ISSN 0895-3309.
  14. ^ Malkiel, Burton G. (2013). "Asset Management Fees and the Growth of Finance". Journal of Economic Perspectives. 27 (2): 97–108. doi:10.1257/jep.27.2.97. ISSN 0895-3309.
  15. ^ https://economictimes.indiatimes.com/mf/analysis/equity-mutual-fund-aum-increases-35-in-2023/articleshow/106143657.cms
  16. ^ https://economictimes.indiatimes.com/mf/analysis/which-hybrid-mutual-funds-contribute-the-maximum-to-category-aum/category-aum/slideshow/108039063.cms
  17. ^ https://www.rbi.org.in/Scripts/BS_ViewBulletin.aspx?Id=18995
  18. ^ a b https://www.reuters.com/business/finance/indian-regulator-bans-new-franklin-templeton-debt-funds-two-years-2021-06-07/
  19. ^ https://business.outlookindia.com/mutual-funds/all-assets-in-closed-franklin-templeton-mf-schemes-liquidated-sbi-funds
  20. ^ a b https://www.moneycontrol.com/news/business/franklin-templeton-mess-a-liquidity-mishap-or-a-series-of-wrong-aggressive-bets-5188271.html
  21. ^ a b https://www.business-standard.com/article/markets/franklin-templeton-moves-to-calm-indian-investors-after-new-debt-fund-ban-121061000043_1.html
  22. ^ "Association of Mutual Funds, India". Retrieved 4 September 2013.
  23. ^ "Boston Analytics - India Watch". Archived from the original on 29 July 2012. Retrieved 4 September 2013.
  24. ^ "Average AUM - Fund-wise". June 2013. Retrieved 4 September 2013.
  25. ^ PTI, Shilpi Pandey (24 December 2018). "2019 bright for mutual funds as AUMs rise ₹3 in 2018". mint. Retrieved 15 March 2021.
  26. ^ Khanna, Surbhi (8 January 2024). "Mutual fund AUM surges by 23.43% in 2023; WhiteOak Mutual Fund AUM increase over 200%". The Economic Times. ISSN 0013-0389. Retrieved 20 March 2024.
  27. ^ "Average AUM". Association of Mutual Funds in India. Retrieved 6 April 2016.
  28. ^ "Average AUM by AMC". Morningstar India. Retrieved 11 July 2021.
  29. ^ "AMC wise Quarterly Average AUM". ICRA Limited. Retrieved 11 July 2021.
  30. ^ Bazaz, Shivani (14 October 2019). "Reliance Mutual Fund is Nippon India Mutual Fund now. Should you exit?". The Economic Times.

External links[edit]