Is the mutual fund industry in India doomed or is it growing at a fantastic ride in India?
We this is such a difficult question to answer that no sane man can answer this question. Having said that, I am planning to make an attempt. If that gives you a hint of my sanity, so be it!!
The facts: You keep hearing every day that a foreigner is pulling out of Indian operations. Since many of them have not confirmed it, I am not naming them.
Then you hear a deal like Goldman Sachs buying over Benchmark mutual fund.
So largely in a country where you are playing around with highly inaccurate data you cannot really do any data driven story – just speculate about the quality of the data that is available!
Let us look at the positive side of the whole thing. I heard (not confirmed) that there are 55 lakh SIPs currently in India. Also the average number being thrown about is Rs. 2500 per month per SIP. Now this means about Rs. 1375 crores per month is flowing into EQUITY FUNDS every month. This is kinda difficult to believe. Assuming this is true, about Rs. 18000 crores flows into equity funds every YEAR. Now assume that in the next 3 years the number of SIPs increases to 110 lakhs and the average SIP amount increases to say Rs. 5000 per month…the amount per month will be Rs. 2750 crores and about 35k crores per annum. Now all this and the existing aum in equities will make this a really significant industry.
Will it happen? I have no clue! However it is possible that all the mutual funds selling SIP aggressively – and the people seeing the advantages will all help.
The load being there or not being there is incidental!!