Indian Mutual Fund Industry

Indian Mutual Fund Industry

The Indian mutual funds industry is witnessing a rapid growth as a result of infrastructural development, increase in personal financial assets, and rise in foreign participation. With the growing risk appetite, rising income, and increasing awareness, mutual funds in India are becoming a preferred investment option compared to other investment vehicles like Fixed Deposits (FDs) and postal savings that are considered safe but give comparatively low returns, according to “Indian Mutual Fund Industry”.

This report provides a detailed analysis along with current and future outlook of the Indian mutual fund industry and explores the market development and potential. The forecasts and estimations given in this report are not based on a complex economic model, but are intended as a rough guide to the direction in which the industry is likely to move.

Key Findings

• The Indian mutual funds retail market, growing at a CAGR of about 30%, is forecasted to reach US$ 300 Billion by 2015.
  
  
• Income and growth schemes made up for majority of Assets Under Management (AUM) in the country.
  
  
• At about 84% (as on March 31, 2008), private sector Asset Management Companies account for majority of mutual fund sales in India.
  
  
• Individual investors make up for 96.86% of the total number of investor accounts and contribute 36.9% of the net assets under management.

Key Issues & Facts Analyzed in the Report

• What are the key factors fueling growth into the Indian mutual fund market?
  
  
• Which are the fastest growing products?
  
  
• What are the key growth prospects?
  
  
• What are the key challenges for the market?
  
  
• How the market is likely to move in future?

Key Players

This section provides business analysis of key players in the Indian mutual fund market, including Reliance Capital, BOB and HDFC.

Research Methodology Used

Information Sources
Information for this report has been sourced from books, newspapers, trade journals, white papers, industry portals, government agencies, trade associations, monitoring industry news and developments, and through access to more than 3000 paid databases.

Analysis Methods
The analysis methods used in this report include ratio analysis, historical trend analysis, linear regression analysis using software tools, judgmental forecasting, and cause and effect analysis.  
 

1. Analyst View

2. Concept of Mutual Funds

3. Indian Mutual Funds Market - An Overview

4. India - An Emerging Investment Destination

4.1 Economic Stability

4.2 Rapid Urbanization

4.3 High Saving Tendency

4.4 High Profitability

4.5 Bullish Stock Market

4.6 Income Level

4.7 Household Investment

4.8 Market Penetration

4.9 Consumer Interest

4.10 Risk Level & Return Potential

4.11 Government Initiatives

5. Market Performance

5.1 By Nature of Funds

5.1.1 Debt

5.1.2 Equity

5.2 By Investment Objectives

5.2.1 Income Schemes

5.2.2 Growth Schemes

5.2.3 Balanced Schemes

5.2.4 Liquid/Money Market Schemes

5.2.5 Gilt Schemes

5.2.6 ELSS Schemes

5.2.7 ETFs

5.3 By Types of AMCs

5.3.1 Bank Sponsored

5.3.2 Institutions

5.3.3 Private Sector

5.4 By Types of Investors

5.4.1 Individual

5.4.2 Institutional

5.4.3 Others

5.5 By Distribution Networks

5.5.1 Banks

5.5.2 IFAs

5.5.3 Others

5.6 By Geographical Distribution

6. Future Outlook

7. New Growth Avenues

7.1 Real Estate Mutual Funds

7.2 Tier II & III Cities

7.3 Personal Savings

7.4 Online Marketing

7.5 Mutual Fund Intermediaries

7.6 Business & Knowledge Outsourcing

7.7 Advertising Media

8. Growth Barriers

8.1 Awareness Level

8.2 Compulsion of PAN Cards

8.3 Real Estate Market

8.4 Evolution of ULIPs

8.5 Employee Attrition

9. Key Players

9.1 Reliance Capital

9.2 UTI

9.3 BOB

9.4 ICICI Prudential

9.5 HDFC

List of Figures:

Figure 3-1: India - Growth in Mutual Fund Assets by Phase (in Crore Rs), Mar 1965 to Mar 2008

Figure 4-1: India - Nominal GDP (in Billion US$), 2002-2007

Figure 4-2: India - Forecast for Nominal GDP (in Billion US$), 2008-2012

Figure 4-3: India - Rural & Urban Population Split (%), 2005 & 2030F

Figure 4-4: India - Share of Household Savings in Gross National Savings w.r.t. Other Countries (%), 2005

Figure 4-5: India - Mutual Funds Operating Profit in Average AUM w.r.t. UK & US (in bps), Mar 2007

Figure 4-6: India - Stock Performance of SENSEX & NIFTY (Mar 2006 to Jan 2008)

Figure 4-7: India - Institutional Investment in Stock Market (in Crore Rs), Mar 2006 to Nov 2007

Figure 4-8: India - Per Head Disposable Income (in US$), 2002-2007

Figure 4-9: India - Forecast for Per Head Disposable Income (in US$), 2008-2012

Figure 4-10: India - Share of Mutual Fund Assets in GDP w.r.t. Other Countries (%), 2007*

Figure 4-11: India - Comparative Risk & Return Matrix of Various Investment Instruments

Figure 5-1: India - Mutual Fund Assets (in ‘000 Crore Rs), 2004-05 to 2007-08

Figure 5-2: India - Gross Sales of Debt Mutual Funds (in ‘000 Crore Rs), 2002-03 to 2006-07

Figure 5-3: India - Gross Redemptions from Debt Mutual Funds (in ‘000 Crore Rs), 2002-03 to 2006-07

Figure 5-4: India - Gross Sales of Equity Mutual Funds (in ‘000 Crore Rs), 2002-03 to 2006-07

Figure 5-5: India - Gross Redemptions from Equity Mutual Funds (in ‘000 Crore Rs), 2002-03 to 2006-07

Figure 5-6: India - Assets under Management by Investment Objectives (%), 2007-08

Figure 5-7: India - Assets under Management of Income Schemes (in ‘000 Crore Rs), 2004-05 to 2007-08

Figure 5-8: India - Assets under Management of Income Schemes by Close & Open End (%), 2007-08

Figure 5-9: India - Sales of Income Schemes (in ‘000 Crore Rs), 2004-05 to 2007-08

Figure 5-10: India - Assets under Management of Growth Schemes (in ‘000 Crore Rs), 2004-05 to 2007-08

Figure 5-11: India - Assets under Management of Growth Schemes by Close & Open End (%), 2007-08

Figure 5-12: India - Sales of Growth Schemes (in ‘000 Crore Rs), 2004-05 to 2007-08

Figure 5-13: India - Assets under Management of Balanced Schemes (in ‘000 Crore Rs), 2004-05 to 2007-08

Figure 5-14: India - Assets under Management of Balance Schemes by Close & Open End (%), 2007-08

Figure 5-15: India - Sales of Balanced Scheme (in ‘000 Crore Rs), 2004-05 to 2007-08

Figure 5-16: India - Assets under Management of Liquid Schemes (in ‘000 Crore Rs), 2004-05 to 2007-08

Figure 5-17: India - Sales of Liquid Scheme (in ‘000 Crore Rs), 2004-05 to 2007-08

Figure 5-18: India - Assets under Management of Gilt Schemes (in ‘000 Crore Rs), 2004-05 to 2007-08

Figure 5-19: India - Sales of Gilt Scheme (in ‘000 Crore Rs), 2004-05 to 2007-08

Figure 5-20: India - Assets under Management of ELSS Schemes (in ‘000 Crore Rs), 2004-05 to 2007-08

Figure 5-21: India - Assets under Management of ELSS Schemes by Close & Open End (%), 2007-08

Figure 5-22: India - Sales of ELSS Scheme (in Crore Rs), 2004-05 to 2007-08

Figure 5-23: India - Assets under Management of ETFs (in Crore Rs), 2006-07 & 2007-08

Figure 5-24: India - Banks Sponsored Mutual Fund Sales & Redemptions (in ‘000 Crore Rs), 2004-05 to 2007-08

Figure 5-25: India - Sales of Banks Sponsored Mutual Funds by Segment (%), 2007-08

Figure 5-26: India - Institutional Mutual Fund Sales & Redemptions (in ‘000 Crore Rs), 2004-05 to 2007-08

Figure 5-27: India - Private Sector Mutual Fund Sales & Redemptions (in ‘000 Crore Rs), 2004-05 to 2007-08

Figure 5-28: India - Sales of Private Sector Mutual Funds by Segment (%), 2007-08

Figure 5-29: India - Unit-holding Pattern of Mutual Funds by Account (%), 2007-08

Figure 5-30: India - Unit-holding Pattern of Mutual Funds by Net Assets (%), 2007-08

Figure 5-31: India - Sales of Equity Mutual Funds by Distribution Networks (%), Apr 2007

Figure 5-32: India - Penetration of Mutual Funds Industry by Distributor (%), 2007

Figure 5-33: India - Sales of Equity Mutual Funds through Banks (in Billion US$), Apr 2005 & Apr 2007

Figure 5-34: India - Sales of Equity Mutual Fund through IFAs (in Billion US$), Apr 2005 & Apr 2007

Figure 5-35: India - Sales of Equity Mutual Funds through National/Regional Distributors (in Billion US$), Apr 2005 & Apr 2007

Figure 5-36: India - Penetration of Mutual Fund Assets (%), 2007

Figure 6-1: India - Mutual Fund Retail Assets (in Billion US$), 2006 & 2015F

Figure 6-2: India - Mutual Fund Institutional Assets (in Billion US$), 2006 & 2015F

Figure 7-1: Tier II & III Cities - Mutual Fund Retail Assets (in Billion US$), 2006 & 2015F

Figure 7-2: India - Forecast for Internet Users (in ‘000), 2008-2011

Figure 7-3: India - AMFI Certified Individuals (in ‘000), 2007-08 & 2015F

List of Tables:

Table 4-1: India - SENSEX Journey from 1000 to 21000 Points

Table 5-1: India - Top Ten Mutual Fund Schemes by Returns (%), July 2008

Table 5-2: India - Individual Mutual Fund Investor Accounts & Net Assets (2007-08)

Table 5-3: India - Institutional* Mutual Fund Investor Accounts & Net Assets (2007-08)

Table 5-4: India - NRI Mutual Fund Investor Accounts & Net Assets (2007-08)

Table 5-5: India - FII Mutual Fund Investor Accounts & Net Assets (2007-08)

Table 7-1: India - Domestic Savings by Sector (in Crore Rs), 1991-92 to 2006-07*

Table 7-2: India - Revenue & Number of KPO Professionals under Banking, Securities & Insurance Research (2006-07 & 2010-11F)

Table 9-1: ICICI Prudential - Key Financial Indicators (May 1998 & Jun 2008)

Table 9-2: HDFC - Key Financial Indicators (Apr 2008)