By Vijayasri S Kaimal
Performance – Past and Present.
India’s private sector mutual fund industry is completing its quarter century this year. Although mutual funds were introduced in India decades ago, it gained popularity and acceptance only during the last few years. Promisingly, individual investors (retail plus high net worth individuals) now hold a considerable share of the mutual fund assets. This is quite evident from the following investment data.
| September 2009 | September 2018 | |
| Value of MF Fund industry assets held by Individuals | Rs.2.58 Lakh Cr. | Rs.12.62 Lakh Cr. |
| Percentage Share of individual Investors | 41 | 57 |
It can also be seen that the value of industry assets held by the individual investors recorded an increase of 39% in absolute figures during the above period.
As per the latest data published by AMFI (Association of Mutual Funds in India), the AUM of the Indian MF Industry has grown from Rs. 4.83 trillion on 30th September 2008 to Rs.22.04 trillion (Rs.22.04 lakh cr) on 30th September, 2018, close to five-fold increase in a span of 10 years. The Industry’s AUM had crossed the milestone of Rs.10 trillion (Rs.10 Lakh Cr) for the first time in May 2014 and in a period of just over 4 years, the AUM size had more than doubled and reached an all time high of Rs. 25.2 trillion in August 2018. The following graph shows the steep growth witnessed in the assets for the past 10 years.
Source: Amfi India
Breakup of Financial Savings.
At this stage, it will be appropriate to examine what the future holds for the Indian mutual fund industry. The chart given below shows the allocation of household savings in financial assets. Bank deposits are still the most preferred financial assets wherein 48% of the household savings have been allocated. Even though the share of household savings in mutual fund assets increased from 9% in 2015 to 13% in 2018as per a recent RBI report, the comparative allocation of household savings in mutual fund assets is still very low in India. There is huge untapped potential for mutual funds as far as household savings are concerned.
The Future
As the economy transforms from a developing to a developed one, we could see fixed income rates trending lower in coming decades.Investors largely started thinking of moving from traditional investment products to those financial instruments that will deliver attractive post tax returns. Nowfixed income investors are looking beyond bank deposits for short term fund parking. Now,they place liquid funds and ultra short term category funds as a substitute to bank deposits. The amount of monthly SIP inflow has crossed 7900 crore. Investors have embraced SIPs as one of their monthly savings instrument along with bank and post office schemes. The investors can now transfer money instantly from their bank savings accounts to mutual funds through mobile applications provided by the mutual fund companies.Whenever the investors require their money back, it is possible to redeem and transfer money back to their bank accounts. After two market crashes in a decade, investors now are well aware of inherent volatility in equity oriented schemes and stay invested with the right spirits.
It will also be interesting to see how some equity mutual fund schemes have fared for the last two decades compared to its benchmark.Generally funds are evaluated with its past performance of one year, three year and five year periods. But we have shortlisted these funds from its 20 year rolling returns. Rolling returns are best measure of performance as this is the annualized returns taken for a specific period on every day/week/month/year.When we analyze the performance, the following mutual fund schemes from different categories have the real wealth creators over these years.
Data as on 24.10.2018
| Scheme Name | Category | SIP Performance :20 Year (Oct 1998-Oct 2018) @ Rs.1000 per month, Total Inv Amt: 2,40,000/- | |
| Present Value of Investments | SIP Return % | ||
| Aditya Birla SL Equity Hybrid ’95 Fund(G) | Aggressive Hybrid | 15,62,057 | 16.33 |
| Canara Rob Equity Hybrid Fund-Reg(G) | Aggressive Hybrid | 14,05,763 | 15.48 |
| SBI Equity Hybrid Fund-Reg(G) | Aggressive Hybrid | 14,52,921 | 15.75 |
| Aditya Birla SL Equity Advantage Fund(G) | Large & Mid | 13,40,184 | 15.09 |
| ICICI Prudential Large & Mid Cap Fund(G) | Large & Mid | 15,13,866 | 16.08 |
| SBI Large & Midcap Fund-Reg(G) | Large & Mid | 18,50,136 | 17.69 |
| Franklin India Bluechip Fund(G) | Large cap | 18,38,587 | 17.64 |
| HDFC Top 100 Fund(G) | Large cap | 22,83,550 | 19.37 |
| Franklin India Prima Fund(G) | Midcap | 30,93,652 | 21.79 |
| Aditya Birla SL Equity Fund(G) | Multi cap | 22,63,778 | 19.30 |
| Franklin India Equity Fund(G) | Multicap | 22,61,898 | 19.30 |
| HDFC Equity Fund(G) | Multicap | 25,69,703 | 20.31 |
| ICICI Prudential Multicap Fund(G) | Multicap | 19,19,896 | 17.99 |
| HDFC Capital Builder Value Fund(G) | Value Fund | 20,79,245 | 18.62 |
25 trillion in 25 years is of course an impressive achievement. More than that, it is the past that presents the future course.