DNA Money Edit: Stock markets on a swing, so is MF industry

As stock markets in the country continue their northward journey, retail investors have boarded the fast-growing mutual fund industry. Equity benchmarks have risen around 20% so far this year, defying sluggish macroeconomic data, geopolitical tensions, foreign fund outflows and expensive valuations. Some mutual fund houses have shown much faster growth. No wonder, the industry’s assets under management (AUM) has doubled to Rs 20.59 lakh crore in August 2017, in a short span of three years. According to the Association of Mutual Funds in India (Amfi), the money market segment witnessed the highest net inflows of Rs 21,352 crore followed by equity (including equity-linked savings schemes), balanced and income funds wherein the investors pumped in Rs 20,362 crore, Rs 8,783 crore and Rs 8,390 crore, respectively.

Retail investors are coming to the MF sector in droves. Data from Sebi shows the total folio count by August-end at 6.08 crore, 2.4% higher compared to the previous month. The growth was primarily on the back of 10.9 lakh new folios added to the equity category (including ELSS), says a report by Icra. Inflows into equity schemes of mutual funds through systematic investment plans (SIPs) have been steadily on the rise. Average monthly inflows into SIPs in the current financial year so far has been Rs 4,636 crore, up 27% over the monthly average of Rs 3,626 crore last year.

Sebi’s move to make strict rules on MF scheme categorisation in order to streamline the plethora of funds being offered by asset management companies will bring in transparency. It will force MF houses to merge similar schemes and help investors identify the right plan.