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Retail participation in fixed income schemes is set to increase in the next two-four years, driven by awareness building campaigns and greater push from the industry.
According to A Balasubramanian, CEO, Aditya Birla Sun Life AMC, retail growth in fixed income schemes is likely to be higher, both in terms of the number of customers coming in as well as assets under management (AUM).
“Currently, lack of awareness, understanding of products and lack of push are deterring the growth of fixed income schemes, particularly among retail investors. However, in the next five years, fixed income as an asset class will be two times higher than the equity asset class,” Balasubramanian told BusinessLine .
A major portion of the inflows into fixed income assets (65-70 per cent) estimated at around ₹15 lakh crore comes from corporates and another 15 per cent from HNIs, while retail accounts for only around 15 per cent.
Despite the fact that returns from fixed income is quite high in the long run because of the compounding effect, the mutual fund industry has not been able to make ‘great inroads’ into building up the retail portfolio.
Birla Sun Life is working on creating the ‘push’ and promoting fixed income schemes as a part of asset allocation strategy.
Markets & fundamentals
Irrespective of election outcomes, the mutual fund industry will continue to grow supported by fundamentals of the economy.
The industry has steadily grown in the last two-three years and currently has close to ₹25 lakh crore worth of AUM. The growth is coming not just from big markets but from penetration into smaller towns and cities.
“Irrespective of what the election outcome is going to be, industry growth is going to remain strong because after demonetisation, the mutual fund industry has gained prominence as a way of savings. This apart, the ‘Mutual Fund Sahi Hai’ ad campaign has also caught investor attention for long-term investing,” he said.
The mutual fund industry, which currently accounts for around 20 per cent of the banking industry’s AUM (deposit base), would grow to 30-35 per cent in the next few years.
Improvement and investment in infrastructure, including road, rail, ports and power; growth in rural consumption; and reforms such as Insolvency and Bankruptcy Code and the Real Estate Regulation Authority Act (RERA) will continue to be key drivers of economic growth.
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