Mutual funds in India

The first introduction of a mutual fund in India occurred in 1963, when the Government of India launched Unit Trust of India (UTI).[1] UTI enjoyed a monopoly in the Indian mutual fund market until 1987, when a host of other government-controlled Indian financial companies established their own funds, including State Bank of India, Canara Bank and by Punjab National Bank.

Mutual funds are an under-tapped market in India

Despite being available in the market[2], less than 10% of Indian households have invested in mutual funds. A recent report on Mutual Fund Investments in India published by research and analytics firm, Boston Analytics, suggests investors are holding back from putting their money into mutual funds due to their perceived high risk and a lack of information on how mutual funds work.[3] There are 46 Mutual Funds as of June 2013.[4]

The primary reason for not investing appears to be correlated with city size. Among respondents with a high savings rate, close to 40% of those who live in metros and Tier I cities considered such investments to be very risky, whereas 33% of those in Tier II cities said they did not know how or where to invest in such assets.

Distribution

Mutual funds in India are distributed mainly in 2 ways:-

Online

Customers can buy mutual funds online via the corresponding asset management company's website or via brokers. There are a number of new platforms that have come which offer direct mutual funds in their platform. Subscribers can buy mutual funds from these platforms.Direct mutual funds provide better returns, generally between .5% to 1.5% more than their regular counterparts. This is due to the fact that brokers charges are excluded from the returns. A 1% deduction from a return of 12% from mutual funds, leads to a 8.33% lesser return to the investor, which is a huge amount.

Offline

Most of the asset management company have an offline distribution network. These distributors mainly sell regular mutual funds which carry some commission on it.

Servicing

Larger Indian Mutual Fund Industry has benefited from outsourcing the activity of servicing their investors to two of the leading Registrar and Transfer Agents (RTAs) in India namely CAMS and Karvy. While CAMS commands close to 65% of the Assets servicing, rest is with Karvy. Franklin Templeton Mutual Fund services its investors through its own in-house RTA set up.

Both the RTAs have a vibrant network of their local offices which enable the Mutual Fund Investors to transact locally. These touchpoints (or) Customer Service Centers (CSCs), provide a wide range of servicing including, financial transaction acceptance & processing, non-financial changes, KYC fulfillment formalities, nomination registration, the transmission of units apart from providing a statement of accounts, etc.

Average assets under management

Assets under management (AUM) is a financial term denoting the market value of all the funds being managed by a financial institution (a mutual fund, hedge fund, private equity firm, venture capital firm, or brokerage house) on behalf of its clients, investors, partners, depositors, etc.
The average assets under management of all mutual funds in India for the quarter Dec 2015 to Mar 2016(in ₹ Lakh) is given below:[5]

Mutual Fund NameTotal SchemesQAAUM AUM (₹ Lakh.)Prev QAAUM (₹ Lakh.)Inc/Dec (₹ Lakh.)Percentage
Axis Asset Management Company2633776454.373456348.883201059%
Baroda Pioneer Asset Management Company111965630.33925542.12401324%
Birla Sun Life Asset Management Company80613678510.713684493.3453120%
BNP Paribas Asset Management Company114509706.79500795.2192092%
BOI AXA Asset Management Company76238501.41242767.9128871%
Canara Robeco Asset Management Company142804326.86751779.86526277%
Pramerica Investment Management827698171941050461%
DHFL Pramerica Asset Management Company4912598683.24216345-80979-37%
DSP Asset Management Company3984015131.253918267.17968652%
Edelweiss Asset Management Company70167774.29163236.2845383%
Escorts Asset Management Company6028559.1829222.27-663-2%
Franklin Templeton Asset Management Company2006784076.497172216.54-384257-5%
Goldman Sachs Asset Management Company18610139.99685179.35-75039-11%
HDFC Asset Management Company117317608456.4417866622.24-256390-1%
HSBC Global Asset Management Company155790382.19837762.82-47151-6%
ICICI Prudential Asset Management Company152917596397.6172236993907512%
IDBI Asset Management Company92689266.37756428.17-67162-9%
IDFC Asset Management Company4535228379.465486421.83-249600-5%
IIFCL Asset Management Asset135797.5634293.8915044%
IIFL Asset Management Company1848543.7642203.84634015%
IL & FS Infra Asset Management Company1292296.3490029.522673%
Indiabulls Asset Management Company56528955.04491675.45372798%
JM Financial Asset Management1791616090.421586776.74293132%
Kotak Mahindra Asset Management Company4315873108.275513383.023624647%
L&T Asset Management Company2462594480.12505850.82899904%
LIC Nomura Mutual Fund Asset Management Company1761315562.41238408.04929428%
Mirae Asset Management Company55313272.14280239.043310112%
Nippon India Mutual Fund101515936949.3415787817.361525611%
Motilal Oswal Asset Management Company31468921.13455222.64141033%
Peerless Asset Management Company5798524.1102441.7-3917-4%
PPFAS Asset Management Company161357.162931.88-1575-3%
Principal Asset Management Company123528106.02587875.66-59770-10%
Quantum Asset Management Company1566093.0465531.635611%
Religare Global Asset Management Company2671959617.911988459.31-28622-1%
Sahara Asset Management Company689929.1611002.32-758-7%
SBI Asset Management Company65210732737.3610058453.696727607%
Shriram Asset Management Company43716.983711.5350%
Sundaram Asset Management Company4792366370.942187696.571853028%
Tata Asset Management Company3243186223.173155590.09267521%
Taurus Asset Management Company65394858.04350334.194452413%
Union KBC Asset Management Company60290228.21273213.25170156%
UTI Asset Management Company122010630921.8210612903.52161240%
Gross11856135912187.2132170477.1


Mutual Fund Acquisitions
Seller Acquired By Year
Pioneer ITI MF000Franklin Templeton02002
Zurich India AMC000HDFC MF02003
Alliance Capital MF000Birla Sunlife02005
Standard Chartered000IDFC02008
AIG Global Investment Group MF000PineBridge MF02011
Benchmark Mutual Fund000Goldman Sachs02011
Fidelity000L&T Finance02012
Morgan Stanley's MF000HDFC MF02013
PineBridge MF000Kotak MF02014
ING Mutual Fund000Birla Sunlife02014
Daiwa AMC000SBI MF02013
Goldman Sachs000Reliance MF02015
Deutsche000Pramerica02015
JP Morgan000Edelweiss02016
Reliance MF000Nippon India[6]02019
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References
  1. "MF History http://www.amfiindia.com/research-information/mf-history". Association of Mutual Funds of India. External link in |title= (help)
  2. "Association of Mutual Funds, India". Retrieved 4 September 2013.
  3. "Boston Analytics - India Watch". Archived from the original on 29 July 2012. Retrieved 4 September 2013.
  4. "Average AUM - Fund-wise". June 2013. Retrieved 4 September 2013.
  5. "Average AUM". Association of Mutual Funds in India. Retrieved 6 April 2016.
  6. Bazaz, Shivani (14 October 2019). "Reliance Mutual Fund is Nippon India Mutual Fund now. Should you exit?". The Economic Times.
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