The Rs 100-trillion MF opportunity

financialexpress.com:

It all started about six decades ago when the Unit Trust of India launched the Unit Scheme-1964 scheme or US 64 as it was popularly known. UTI held sway over the mutual funds market for nearly 25 years thereafter before the space was thrown open to other state-owned players. But even after the private sector was allowed entry it took until May, 2014 for the average assets under management (AAUM) to hit the Rs 10-trillion mark. That had probably less to do with the chequered career of US 64 than the low levels of awareness of the stock market. However, over the last decade the value of assets has soared, crossing Rs 46 trillion in July; in the last three years, the industry clocked in a compounded annual growth rate of nearly 20%. Now, given how fast folios are being added and how the stock market is booming, the Rs 50 trillion mark seems just round the corner.

Investors are buying the industry’s motto—Mutual funds sahi hain—in their quest to accumulate wealth. On its part, the Association of Mutual Funds in India (Amfi) has onboarded two former cricketers – Sachin Tendulkar and Mahendra Singh Dhoni – known for their consistency and longevity— to showcase its products as long-term wealth creation tools.

Since bigger AUMs can be very rewarding for the bottom line, asset management companies (AMCs) can be expected to keep at it. They have a fast-growing economy, rising incomes and favourable demographics on their side. As A Balasubramanian, MD and CEO of Aditya Birla Sun Life AMC, points out, with the per capita income of the country increasing, more investors will discover the power of MFs and tools like systematic investment plans (SIPs). “There is huge scope for further penetration because there are only about 40 million