MF Industry
Indian mutual fund industry
Distribution continuum:
Key to success
kpmg.com/in
Foreword
Though India’s savings rate has been between 30-35 per cent since last few years, investment in mutual funds have been minimal as compared to other avenues for investment1.
Emphatically speaking, mutual fund business follows a business to business model (B2B) rather than a business to consumer (B2C) model and hence, distribution is a critical success factor for any mutual fund. Despite the efforts, the mutual fund products continues to remain a ‘push’ product rather than a ‘pull’ product.
Indian mutual fund industry has evolved over the years.
Though, it has grown at a Compounded Annual Growth
Rate (CAGR) of 15 per cent from FY07 to FY13, the growth performance in the recent years have been rather subdued.
However, Assets Under Management (AUM) as a per cent of GDP for India is about 5 to 6 per cent, significantly lower than some other emerging economies, for example, 40 per cent for Brazil and around 33 per cent for South Africa2. This indicates significant headroom for growth. However, the industry growth will continue to be characterised by external factors such as volatility and performance of the capital markets, and macro-economic drivers such as GDP growth, inflation and interest rates.
Industry recorded an AUM of INR 8,800 billion. The highest
AUM was recorded in August 2013 as INR 9,580 billion.
Though on the whole, the mutual fund industry witnessed a
decline in AUM in December 2013, the AUM of equity funds increased by 4.5 per cent3 on account of rising stock prices.
One could see a shift with the changing demographic profile of the Indian population, with new products being launched
(for example, products being linked to pensions), coupled with financial awareness and literacy initiatives for investors both by the industry and the regulator, and with the onus of expanding the market falling on the distributors—the
first
Distribution continuum:
Key to success
kpmg.com/in
Foreword
Though India’s savings rate has been between 30-35 per cent since last few years, investment in mutual funds have been minimal as compared to other avenues for investment1.
Emphatically speaking, mutual fund business follows a business to business model (B2B) rather than a business to consumer (B2C) model and hence, distribution is a critical success factor for any mutual fund. Despite the efforts, the mutual fund products continues to remain a ‘push’ product rather than a ‘pull’ product.
Indian mutual fund industry has evolved over the years.
Though, it has grown at a Compounded Annual Growth
Rate (CAGR) of 15 per cent from FY07 to FY13, the growth performance in the recent years have been rather subdued.
However, Assets Under Management (AUM) as a per cent of GDP for India is about 5 to 6 per cent, significantly lower than some other emerging economies, for example, 40 per cent for Brazil and around 33 per cent for South Africa2. This indicates significant headroom for growth. However, the industry growth will continue to be characterised by external factors such as volatility and performance of the capital markets, and macro-economic drivers such as GDP growth, inflation and interest rates.
Industry recorded an AUM of INR 8,800 billion. The highest
AUM was recorded in August 2013 as INR 9,580 billion.
Though on the whole, the mutual fund industry witnessed a
decline in AUM in December 2013, the AUM of equity funds increased by 4.5 per cent3 on account of rising stock prices.
One could see a shift with the changing demographic profile of the Indian population, with new products being launched
(for example, products being linked to pensions), coupled with financial awareness and literacy initiatives for investors both by the industry and the regulator, and with the onus of expanding the market falling on the distributors—the
first