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The mutual fund industry seems to have registered a 12 per cent growth in assets under management (AUM) at Rs 8.89 lakh crore till November this year, as against Rs 7.93 lakh crore in the same period last year.
Little for investors Unfortunately, equity-focused funds have eroded investor investments despite the Sensex touching a life-time high in the latter part of the year. Equity fund assets dipped 8 per cent to Rs 1.76 lakh crore (Rs 1.91 lakh crore) in the first eleven months of this year, while those of non-equity jumped 19 per cent to Rs 7.13 lakh crore (Rs 6.01 lakh crore).
Most long-term investors in mutual funds have burnt their hands and the industry has failed to attract large investments. The huge volatility in the capital market has restricted fresh fund flows into the existing systematic investment plans of equity schemes.
Quantum adds 7,400 Equity-focused funds saw large-scale redemptions leading to mutual funds selling shares on the bourses throughout the year, barring May and August.
According to I.V. Subramaniam, Director, Quantum AMC, despite short-term hiccups, equity funds have delivered double-digit growth over five years. In fact, he added, Quantum managed to add 3,400 new investors in equity and 4,000 in non-equity over the year.
“Going ahead, the industry needs to create a transparent system on charges incurred while investing through distributors. Transparency on charges would make investors comfortable while dealing with dealers,” he said.
With returns from equity investments turning negative, domestic funds have focused on the debt market to benefit from higher interest rates and have invested Rs 4.3 lakh crore in the debt market in the first 11 months of the year.
Volatility, a worry The lower risks associated with debt investment has also wooed investors to debt funds.
Aashish P. Somaiyaa, Chief Executive Officer at Motilal Oswal Asset Management Company, said it was a mixed bag for the mutual fund industry this year even as investors continued to withdraw equity assets, while volatility in debt markets was another source of disappointment.
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