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Insurance & Investment
Fortnightly News
Mutual funds' equity investor base at record high
The number of investors in the country's Rs 19-lakh crore mutual fund (MF) sector has climbed to an all-time high.
At the end of last month, the number of equity MF folios was 42.17 million; total folio count was 57.19 mn. Both are a record. It took the sector nearly eight years to surpass the previous high of 41.13 mn equity folios, touched in March 2009. The previous best count for total folios was 48.17 mn in March 2010.
After the global financial crisis, the equity investor base had shrunk by nearly 30 per cent, to 29.18 mn. In the past three years, equity folios have seen annual growth of 45 per cent, with the rally in domestic stocks and consistent inflow into equity schemes.
Interestingly, MF equity folios are now 50 per cent more than the total of dematerialised accounts, of 28 mn. In other words, many more investors are now accessing the capital markets through the MF route than by direct equity investing.
In the past three years, equity assets under management (AUM) have increased three-fold, from Rs 2 lakh crore to Rs 6 lakh crore. Overall AUM has nearly doubled, from Rs 10 lakh crore to Rs 19 lakh crore.
In the past 12 months, MFs have got a net inflow of Rs 83,469 crore, a monthly average of nearly Rs 7,000 crore.
Motilal Oswal, head of Motilal Oswal Financial Services, says the recent flows have been unprecedented and an equity investment cult is developing rapidly. The increasing popularity of systematic investment plans (SIPs) are helping, say experts.
Sector officials say investor awareness campaigns have borne fruit. "The industry's consistent approach to spread awareness about mutual funds and SIPs, in particular, have helped the sector bring in more investors from across the country," says Sundeep Sikka, chief executive officer at Reliance Nippon MF.
Mutual Funds can now register online with Sebi portal
To improve ease of doing business, markets regulator today launched an online registration mechanism for mutual funds.
The move would help in making it easier for the existing and new fund houses to complete their registration with Sebi much faster and in a cost-effective way.
In a circular, the regulator said it has decided to operationalise 'Sebi Intermediary Portal' for the entities to submit the mutual funds registration applications online.
The portal has been made operational from today.
All the applications for registration of mutual fund would be made through this portal only.
"The applicants will be separately required to submit relevant documents viz declarations/ undertakings required as a part of application form prescribed in relevant regulations, in physical form only for records, without impacting the online processing of applications for registration," it said.
Earlier Finance Minister Arun Jaitley in his budget speech for 2017-18 announced that the process of registration of financial market intermediaries will be made fully online by Sebi.
Sebi issues framework for mutual funds, portfolio managers at IFSC
NEW DELHI: Markets regulator Sebi on Tuesday allowed mutual funds, alternative investment funds and portfolio managers, operating in international financial services centres (IFSC), to invest in securities listed in such centres.
Besides, they are permitted to invest in securities issued by companies incorporated in IFSC, the Securities and Exchange Board of India (Sebi) said in a circular. Further, they can also invest in securities issued by firms incorporated in India or companies belonging to foreign jurisdiction, it added. These investments are subject to conditions stipulated or issued by RBI and government from time to time.
MFs’ trading volume doubles on NSE
Trading volumes on the mutual fund platform of the NSE have doubled last fiscal to Rs.16,563 crore against Rs.7,624 crore logged in FY16, on the back of investors’ renewed interest to tap into the bull-run in equity markets.
The NSE mutual fund platform (NMF) is only for Association of Mutual Funds of India-registered MF distributors and Registered Investment Advisors. The number of distributors registered on the NSE has increased to 2,150 against 1,500 in March, 2016.
Thanks to the efforts put in by MFs, the number of transactions on the platform more than tripled to 26.94 lakh from 7.69 lakh in FY16. Interestingly, the number of systematic SIPs registered on the platform have almost quadrupled to over 2.30 lakh (60,000).
Mukesh Agarwal, CEO — Mutual Funds, NSE, said apart from the wide reach the exchange commands, the volumes on the mutual fund platform were boosted by the convenience it provides to distributors, particularly in rural regions where reaching out to different mutual funds separately becomes an issue.
“We aim to develop the platform as a one-stop-shop for mutual fund houses and distributors while striving to improve the efficiency in the mutual funds space by introducing new facilities,” he said.
Of the existing 42 MFs registered with the AMFI, 35 are listed on the NMF. While there are no specific charges on distributors for trading on the platform, individual distributors have to make a deposit of Rs.15,000 and it is Rs.25,000 for corporate distributors. The platform also reduces the IT infrastructure expenses substantially for the distributors.
Instant redemption
Agarwal also said the platform is aiming to speed up redemption. “Our aim is to speed up the redemption process for investors. Currently, we are providing instant redemption on a specific fund floated by Reliance MF and will be open to list more such schemes,” said Agarwal.
SEBI has mandated instant redemption up to Rs.50,000 per investor in liquid funds. Reliance Mutual Fund and DSP Black Rock provide instant redemption facility. Just like offer-for-sale done by corporates, the NSE is planning to introduce ‘Sovereign Gold Bonds’ on the NMF platform.
Mutual funds' AUM inching towards Rs 20 trillion mark
Backed by a booming stock market and increasing interest from retail investors, the assets under management (AUMs) of the mutual fund industry is likely to touch the magical mark of Rs 20 trillion next month.
Moreover, investment by the MF players in the equity market has surpassed that of foreign institutional investors, figures from industry body AMFI have revealed.
The AUM of the country's MF industry grew 9.8 per cent to Rs 19.26 trillion in April, from Rs 17.54 trillion in March, and it was likely to cross the Rs 20 trillion milestone in the next month itself if the assets grow by another 4 per cent, according to AMFI data collated by rating agency Icra
AMFI, or the Association of Mutual Funds in India, is a nodal association of MFs across the country.
Of the Rs 1.5 trillion that investors pumped in different categories in April, liquid, income, and equity funds (including equity-linked savings schemes or ELSS) saw the highest inflows, it said.
The three categories saw net inflows of Rs 0.99 trillion, Rs 0.35 trillion and Rs 0.09 trillion, respectively.
Equity funds also got support from the broader market rally as the BSE Sensex hit an all-time high of 30,000 in April.
Equity funds (including ELSS) witnessed net inflows of Rs 9,429 crore in April, an increase of 14.8 per cent MoM and 112.5 per cent YoY. This comes on top of over Rs 70,000 crore investments in equities in the fiscal 2017.
In April, net inflows via the SIP route hit an all- time high of Rs 4,200 crore, the data showed. According to the AMFI, the industry added around 6.26 lakh SIP accounts every month on an average during the last fiscal with an average ticket size of Rs 3,660 per account.
MFs pumped in Rs 54,912 crore into the country's equity market as against Rs 52,977 crore by FIIs/FPIs during the year gone by.
The trend continued in April where MFs' quantum of net investment in equities stood at Rs 9,918 crore compared with Rs 2,417 crore by FIIs/ FPIs, the report said.
Total folio count at the April-end grew 1.3 per cent at 5.61 crore from March, a SEBI data said.
Folios are numbers designated for individual investor accounts, though one investor can have multiple accounts.
The growth was primarily on the back of 5.85 lakh new folios added to the equity category (including ELSS) and 1.5 lakh new folios to the balanced category. Exchange-traded funds were the only category to witness a decline of 20,000 folios, which could be due to the category's underperformance compared with the actively-managed funds, it added.
In the last 12 months, assets from beyond 15 cities, or B15 towns, have grown 43.9 per cent due to investor- friendly initiatives by the regulator and awareness campaigns by asset management companies (AMCs).
The B15 assets grew Rs 98,525 crore to Rs 3.23 trillion in April from Rs 2.24 trillion a year ago. Currently, B15 towns account for 16.9 per cent of the total assets of the MF industry. However, the share of direct plans in B15 towns is only 22.3 per cent as against 45.6 per cent in top 15 cities.
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