Mutual Funds in India a Perspective. Industry Trends Copyright 2018 Association of Mutual Funds in India

Transcription

1 Mutual Funds in India a Perspective Industry Trends Copyright 2018 Association of Mutual Funds in India 1

2 Indian Mutual Fund Industry Over the Years PHASE V PHASE I UTI established as the first Mutual Fund PHASE II Entry of Public Sector Funds PHASE III Entry of Private Sector Funds & foreign fund houses PHASE IV Growth & Consolidation Phase 2014 onwards AUM crosses 10 Tn in May 2014 Currently, 22 Tn 2

3 Industry Growth Trends - AMCs Number of AMCs over the years

4 Industry Consolidation M&A Trends 4 Number of M&A Activities AMCs have exited since 2002 ( 9 AMCs in the last 5 years) 4

5 Break-up of Current Number of Schemes Present Number of Schemes : 1,951 Open Ended Schemes Close Ended Schemes Interval Schemes 837 1, Debt Schemes 325 Equity Schemes 44 ELSS 30 Balanced Schemes 52 Liquid Schemes 39 Gilt Schemes 12 Gold ETFs 55 Other ETFs 41 FoF - Domestic 28 FoF - Investing overseas 895 Debt Schemes 113 Equity Schemes 24 ELSS 8 Infrastructure Debt Funds Industry Trends (All under debt category) As on January 31,

6 AUM & Folios - Growth Trend New Govt. elected Global Financial Crisis Demonetization of 500 & 1000 currency notes AUM (INR (` Lakh Lakh Crores) Folios (Crores) Source : AMFI Data for 2007 to as on 31 st March each year. Data for as on January 31,

7 Composition of Assets under Management AUM Composition Equity Schemes 41.40% MMF & Liquid Schemes 19.90% Debt Schemes 35.30% MMF & Liquid Schemes Debt Schemes Equity Schemes Equity-oriented schemes include equity hybrid funds. 7

8 17% 20% 20% 22% 25% 24% 27% 27% 80% 80% 78% 75% 76% 73% 73% 83% Penetration Beyond the Top 15 Cities To improve the reach of mutual funds in smaller cities/ towns, in September 2012, SEBI allowed AMCs to charge additional expense ratio upto 30 bps on daily net assets for inflows beyond top 15 cities (subject to fulfilling of certain conditions). Currently, over 27% of the AUM in respect of individuals from comes from beyond the Top 15 cities Growth in B15 AUM (Individuals) Mar-13 Mar-14 Mar-15 Mar-16 Jan-17 Mar-17 Dec-17 Jan-18 T-15 Cities B-15 Cities T15 Top 15 cities B15 Cities Beyond the Top 15 cities. 8

9 SIP Contributions Growing Steadily SIP Book size (Crs) 7, , , , FY 2016 FY 2017 FY 2018 Sep 2018 Source : AMFI 9

10 Still a Long Way To Go Population of India : 1.34 Billion+ No. of people having Bank Account : 750 Million+ No. of people having Insurance : 350 Million+ No. of people having Income Tax Number: 290 Million+ Number of Mutual Fund accounts : ~ 66 Million Number of unique Mutual Fund investors : ~20 Million Less than 1.5% of India s population invests in MFs 10

11 2% -2% 2% -1% 2% 2% 2% 0% 3% 12% 10% 9% 5% -18% 4% 21% 11% 17% 14% 17% 14% 11% 24% 15% 13% 44% 17% 18% 58% 57% 56% 50% 10% 25% 16% 62% Share of Mutual Funds in Financial Savings Increasing share in household financial savings Currency Shares, Mutual Funds and Debentures Provident and pension funds Deposits Insurance Others Share of Mutual Funds, stocks & bonds has improved over the years, but is still much lesser than Insurance and Deposits Source : Reserve Bank of India (RBI) 11

12 REGULATORY UPDATES

13 Regulatory Updates Categorization and Rationalization of Mutual Fund Schemes To bring in uniformity in the characteristics of similar type of schemes launched by different Mutual Funds, there was a need to standardize the scheme categories and characteristics of each category. The Schemes would be broadly classified in the following groups: Equity Schemes Debt Schemes Hybrid Schemes Solution Oriented Schemes Other Schemes 13

14 Regulatory Updates Enhancing fund governance for Mutual Funds Cap on tenure of independent trustees, independent directors of AMCs and auditors. Benchmarking of Scheme s performance to Total Return Index Selection of a benchmark for the scheme of a mutual fund shall be in alignment with the investment objective, asset allocation pattern and investment strategy of the scheme. The performance of the schemes of a mutual fund shall be benchmarked to the Total Return variant of the Index chosen as a benchmark Additional expenses of up to 0.30% in respect of B15 cities From 1-Apr-2018, additional TER of 30 bps allowed for inflows from beyond top 30 (B30) cities, instead of beyond top 15 (B15) cities. 14

15 Regulatory Updates Prudential Limits on portfolio concentration risk in Debt Oriented Mutual Funds Single Issuer Limit (i.e., investment limit in bonds of a single company) has been reduced from 15% to 10% of the net asset value, or NAV extendable up to 12% of NAV with the prior approval of the Trustees. Sector exposure Limit Exposure limits to a single sector reduced from 30% to 25% of NAV Additional exposure limits to HFC increased from 10% to 15% of NAV Group exposure Limit Total exposure to bonds in a Group of the NAV of the fund (excluding investments in securities issued by Public Sector undertakings, Public Financial Institutions and Public Sector Banks) not to exceed 20%. Re-classification of Schemes : Uniformity across Industry Revision TER Slab structure : Abolition of Upfront commission model. Reduced the maximum chargeable TER by 25 bps. 15

16 Investor Friendly Regulatory Measures 16

17 Mandatory Disclosures on MF website Mandatory disclosure of Monthly Portfolio on mutual fund website Performance dashboard of each scheme, including scheme s AUM, investment objective, expense ratios, portfolio details, scheme s past performance etc. in a comparable, downloadable format Disclosure of Investment Valuation policy Proxy Voting policy of the AMC and details of votes cast Disclosure of commission paid to top distributors Disclosure of unclaimed redemption & dividend amounts Disclosure of investor complaints in prescribed format Daily Disclosure of Total Expense Ratio on mutual fund website 17

18 Investor Friendly Measures Limits on fees and expenses charged to scheme (Cost of investment under control) Separate Direct Plan with lower expense ratio. (Unique to MF industry) Mandatory listing of close ended mutual fund schemes within stipulated time (Protection from illiquidity) Mandatory creation of investor education fund ( 2 bps of daily net assets). Half the amount is now pooled with AMFI for Industry level initiatives Mutual Fund Sahi Hai Product Labelling of Mutual Funds using Riskometer for easy understanding of risk level Issue Monthly / Half-Yearly Consolidated Account Statement (CAS) to investors, with details of each security / MF scheme units across securities market, including name/isin, number of shares/bonds/units held, purchase cost and current market value etc. In addition, MFs need to disclose Distributors commission & TER in Half Yearly CAS 18

19 Geographical Spread AUM Concentrated in top cities Top five states account for 70% of total MF industry AUM Folios AUM Top 5 Cities 43% 70% Top 10 Cities 54% 80% Top 20 Cities 64% 85% Top 30 Cities 70% 88% State AAUM as on Jan 2018 (INR Crores) % Share Maharashtra 9,54, % New Delhi 2,27, % Karnataka 1,68, % Gujarat 1,54, % West Bengal 1,25, % Others 6,95, % Total 23,25, % 19

20 Challenge of Reaching out MF Distributors 1 Lakh Insurance Agents 2.1 Million RIAs 835 Commission Earned During No. of Distributors > INR20,00,000 2,865 > INR5,00,000 and < INR20,00,000 7,095 > INR50,000 and < INR5,00,000 16,807 > INR10,000 and INR50,000 9,431 INR500 and < INR10,000 7,776 < INR500 2,312 Total 46,286 Source : MF Distributors: AMFI Investment Advisers : SEBI Insurance Agents: 20

21 Potential growth of Mutual Fund Industry Forecasted AAUM Based on past 5 years average growth AAUM FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 Industry Trends 21 21

22 Thank You