Despite the current IPO frenzy due to the ever-peaking secondary market, mutual funds are not far behind in attracting investors. Notwithstanding the Franklin Templeton fiasco last year, the giant Indian MF industry has been creating its own records this year.

Recently, SBI Mutual Fund mopped up over ₹13,000 crore through a new fund offer for its Balanced Advantage Fund. This is the highest-ever collection via NFO. Besides, the fund house has attracted investment from over 4 lakh investors across the country aided by its robust online reach. The SBI MF feat comes within weeks of ICICI Prudential MF setting a new record. Earlier in July, ICICI Prudential Mutual Fund’s Flexi Cap Fund raised ₹10,000 crore for its Flexi Cap Fund from over 4 lakh retail investors. Similarly, Aditya Birla Sun Life Multi-Cap Fund in May also managed to attract investment of ₹1,900 crore from over 88,000 investors.

New players

Another interesting aspect to this industry is the advent of players keen to enter the AMC space. Recently, Zerodha, a discount broking firm, received regulator nod to launch MFs. A month back, Bajaj Finserv also received SEBI’s nod to launch MF products.

Besides brokerages such as Angel Broking and Samco Securities also received SEBI’s nod for AMC business. Top MF distributor NJ Group is also expected to run a data-driven mutual fund house.

A flurry of NFOs

Riding on the secondary market boom, asset management companies are also launching a slew of mutual fund schemes. In July alone, 26 scheme information documents (SIDs) were filed with SEBI. In August, another 20 SIDs were filed while already documents for three schemes have been filed in September. So far this year (January-July), about 40 open-ended schemes have been launched by fund-houses. Most of the equity schemes were based on global theme, mid-cap & small-cap, and consumption theme. Relatively new fund houses such as Navi and Trust are planning to launch more schemes.

What is most heartening on the NFO front is that most fund houses have launched Exchange Traded Funds (ETFs) based on various indices/themes. ETFs are not only low-cost products but are also relatively less risky.

All these have helped the assets under management of the Indian MF Industry grow over four fold from ₹7.28-lakh crore as on July 31, 2011 to ₹35.32-lakh crore as on July 31, 2021 in a span of 10 years.

Millennials’ preference

According to a recent Paytm Money report ‘ How the young Indian millennial invests ’, a whopping 64 per cent preferred MFs. Even in the MF space, over 76 per cent of users transacted in SIPs and 75 per cent of the total transactions were made through SIPs. On average, each user registered 5 SIPs and did 19 SIP transactions, and each user did 10 lumpsum transactions on average while the average amount invested grew by 29 per cent.

These are all healthy signs and show the maturity of investors. Instead of dabbling directly in the equity space, the indirect entry into market through mutual funds is a right step.

On its part, AMCs should ensure that there is no mis-selling and must guide investors properly based on their needs. If AMCs and fund managers keep wealth and funds of investors safe, the long-term goal of expanding further and growing faster will become a reality for the MF industry given the huge middle-age population.

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