Ratings agency Crisil on Thursday said the mutual fund industry will post double-digit growth for the next few years and its assets under management will cross Rs 50 lakh crore by 2025. Crisil’s research wing said the increase in inflows is bound to be fuelled by investments into equities as against other asset classes.
Investor interest in the mutual funds segment has been changing lately because of market volatility, and the average assets under management stood at around Rs 30 lakh crore as of November 2020.”Over the five years through 2025, we expect the industry’s assets under management (AUM) to continue its double-digit growth and cross the Rs 50 lakh crore mark,” Crisil’s Managing Director and Chief Executive Officer Ashu Suyash said.
She said equities, whose share stands at 42 per cent at present, will drive the increase over the next five years and contribute 47 per cent of the AUM by 2025. The increase in the pie for equities is in line with global experiences, she added. India’s favourable demographics, increased financialisation of savings, an inflation-targeting regime, and rising per-capita income will be the primary growth drivers to pull flows into the segment, Suyash noted.
In the last 20 years, the AUMs of the industry have grown at a compounded growth rate of 18.5 per cent per annum, Crisil said, adding that they stood at Rs 1.4 lakh crore as of 2003. Meanwhile, speaking at the launch of the report, industry lobby Amfi’s chairman and chief executive of Kotal Mutual Fund Nilesh Shah said there needs to be a relook at the level of disclosures with which the industry works.
