Digital Mode of investments sees rise to INR 2735.80 bn as March 2019, as compared to INR 74.79 bn , as on March 2016-17
Mumbai:Aadhaar-enabled eKYC mode will significantly trigger SIP inflows from smaller towns, digitally and through traditional mode, in to the 44-player strong Indian Mutual Fund industry. The share of digital gross inflows which grew from INR 74.79 bn three years ago to nearly INR 2735.80 bn by end-fiscal March 31, 2019, is expected to further aid rapid influx of digital money into the Mutual Fund industry and help achieve four times growth to INR 100 Trillion AUM in the next decade.
Mr N S Venkatesh, Chief Executive, AMFI said: “Given the growing smartphone and internet penetration in the hinterland, and Aadhar-enabled eKYC as the facilitator, we will be able to achieve mutual fund inclusion in a big way. Gradually, inflows through the physical route which have been slowly declining, will pave way for influx of digital money from big and small towns alike”.
The government has also played a significant role in digitisation through its extensive efforts at financial inclusion, spreading financial awareness to the remotest parts of the country and bridging the geographical divide. The recent proposal by the government to use Aadhaar for eKYC will ease digital transactions, Mr Venkatesh said.
While the individual investors continue to invest via the intermediaries, the influence of digital has been growing significantly, especially during the discovery or exploration phase, wherein investors tend to do their homework on their smart phones and internet on making the choice of which Mutual Fund schemes to choose and invest, AMFI-BCG Vision document notes.
Adding 4 lakh new channel partners in small towns and investing in building a sustainable distribution network, leveraging digital and increasing the direct presence of AMCs will also be necessary to reach tier 3 and tier 4 locations, the AMFI vision document notes.
The number of customers purchasing any product online has grown seven-fold in the last three years. Mutual funds too, have seen a high digital take-off with 60% urban Mutual Fund investors having had digital influence in their purchase of MFs and almost 30% of them have purchased MF schemes, digitally, the AMFI vision document has observed.
To sum up, the AMFI vision document observes that while digital is gaining traction, however, retail and HNI investors across small and big towns and metros as well, continue to rely on intermediaries for their advice and help
Maharashtra tops in share of AUM, accounts for 42% of AUMs
Equity AUMs in four states rise average 40% in last 5 years, with equity AUMs rising 2.5 times in Delhi
Maharashtra accounted for highest share, 42 per cent of the Total Mutual Fund AUMs as on June 2019, on the back of encouraging rise in equity MF AUMs to 39% as on 2019 from 16% in 2014.
The share of equity AUMs, however, in each of these states has risen significantly over the period of last five years, following Maharashtra’s pattern. Equity AUMs jumped in Delhi to almost 38% in 2019, from mere 14% in 2014; Karnataka to 40% from 23%, West Bengal to 41% from 24%; and Gujarat to 42% from 30%.
The other four of the Top 5 states viz New Delhi at 9 per cent, Karnataka and Gujarat each at 7 per cent and West Bengal at 5 per cent, followed Maharashtra, with only single-digit percentage in overall AUM share.
Amongst the key reason behind the increase in inflows from equities has been due to the financial literacy and awareness initiatives amongst individual investors about Mutual Funds as a long term investment avenue amongst individual investors, as also Mutual Funds Sahi Hain campaign which influenced investors to stick to equity SIPs in a disciplined way, despite uncertainty in the equity markets.
While the AUMs in top 5 cities grew at 21%, the AUMs of the remaining states (including union territories), grew at a faster rate of 24.4%.
Talking of cities, majority of the mutual fund assets were held in the top 30 (T30) cities. However, boosted by the regulator’s move to allow asset management companies to charge an additional 30 bps expense ratio to incentivise penetration in smaller towns (beyond top 30, or B30 cities). As of June 2019, this segment accounted for 15.5% of the industry’s assets, translating to Rs 4 trillion in value.
In terms of asset allocation of the top five states, the share of equity-oriented funds has increased significantly over the past five years. As of March 2014, Gujarat had the highest allocation (30%) to equities. However, the other four states have caught up since then, aligning to a more balanced asset mix.