The five-year period from 2014 to 2019 has seen a major leap in the assets under management of the equity linked mutual funds type. In terms of absolute numbers, the value of mutual funds now being administered is Rs 25.8 lakh crore. This constitutes a healthy 45% of the overall AUM with the various firms. The figure used to be just 24% 5 years earlier. In a report by the Association of Mutual Funds of India and the credit rating agency CRISIL, these details have been brought out. The report says the main reason for this increase is a combination of interest shown by retail investors as well as high net worth individuals (HNIs).
The contributions through systematic investment plans (SIPs) has been quite remarkable. The corresponding rise of the equity index in the Indian stock markets is another key factor for this robust showing. The CRISIL-AMFI report points out that the equity market has been offering an average return of 12.8% through this 5-year period.
Digging deeper, the AMFI’s monthly reports on receipts through the SIP route have indicated that the last 3 years alone there has been an inflow of Rs 2.3 lakh crore of SIP investments. The total assets under management rose by Rs 11.9 lakh crore during the same period making the SIPs a sizeable 20% of the overall kitty. The share of SIPs has steadily risen from 8% to 12% now, an increase of 50%. This again has happened in the last 3 years alone.
The systematic investment plan route appears to have found favour with the investing public and they see its virtues as a safe long-term investment tool. Though the markets zoom and crash, it evens out at the end of the day the day and the overall returns, safety of the investment and being useful to meet expenses like marriages, children’s education etc. count as the merits of SIP.
The contribution from SIP to the AUM on a monthly basis crossed Rs 8,000 crore in the month of December last and has remained steady there. This year it could cross the Rs 1.0 lakh crore mark. It used to be around Rs 43,000 crore only in financial year 2016-17.