Indian Asset Management Market 2022-2027: Mutual Fund Under-Penetration Offers Growth Potential

DUBLIN, May 09, 2022–(BUSINESS WIRE)–The report “India Asset Management Market – Growth, Trends, COVID-19 Impact, and Forecasts (2022 – 2027)” has been added to from offer.

The Indian asset management market is expected to grow at a CAGR of around 14% during the forecast period.

Indian Asset Management Companies (AMCs) own (AUM) worth INR 24.46 trillion, of the total assets in the sector, about 80% belong to the top 10 AMCs in the market.

Assets under management by India’s mutual fund industry increased from INR 23.59 trillion in November 2018 to INR 26.94 trillion in November 2019 (based on average assets per month). This represents a growth of 14.21% in assets compared to November 2018. Rising AUMs and regulatory efforts to reduce costs for clients are expected to lower the return (Total Expense Ratio) on AUMs for the sector at long term.

However, the growth in assets under management with a favorable mix and a continued focus on improving operational efficiency argue in favor of sustainable earnings growth. The last few years have witnessed a significant evolution in the asset management industry in India. Individual investors have experienced significant growth and now control nearly 58% of assets under management.

Equities as an asset class have grown in importance, now accounting for almost 45% of assets under management compared to 23% five years ago. Much of this change has been driven by growing penetration in B15 cities which now account for almost a quarter of the AUM.

Main market trends

Increasing SIP Accounts (Systematic Investment Plan):

Systematic Investment Plans (SIPs) have made retail investing more sustainable, protecting investors from market volatility. An average of 9.55 lac SIP accounts each month in the financial year 2019-2020, with an average SIP size of around INR 2,800 per SIP account. Mutual fund SIP accounts stood at 2.94 crore and the total amount raised through SIP in November 2019 was INR 8,273 crore.

SIP has remained the preferred route for retail investors to invest in a mutual fund, as it helps them reduce market timing risk. The SIP installment amount can be as low as INR 500 per month. SIP is like a recurring deposit where you deposit a fixed amount each month.

SIP is a very convenient method of investing in mutual funds with standing instructions to debit your bank account every month, without having to write a check each time. SIP has gained popularity among Indian MF investors as it helps to average Rs costs and invest in a disciplined manner without worrying about market volatility and market timing.

Under Penetration of Mutual Fund offers growth potential:

India lags behind most major countries in the world in terms of mutual fund assets under management as a percentage of gross domestic product (GDP) at just 11% compared to the global average of around 62 %. Relatively low penetration offers significant potential and an opportunity for strong future growth.

India offers huge untapped potential and an opportunity for mutual funds to be an excellent vehicle for channeling household savings into productive investments. The industry has seen exponential growth in the retail base, with the industry adding over 4 crore new accounts and assets under management more than doubling from around INR 11 trillion to over 25,000 INR billion. Another notable trend has been the growing participation of investors from Tier II and Tier III cities, which now account for approximately 23% of individual investor assets in the industry.

Competitive landscape

The report covers major players operating in the Indian asset management market. The market studied presents opportunities for growth over the forecast period, which is expected to further drive competition in the market. The Indian asset management market is consolidated, with major players holding the majority of the market.

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Laura Wood, Senior Press Officer
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