The Indian capital markets have witnessed a marked shift in the last few years, largely owing to the mutual fund industry which has been instrumental in channelising retail savings into the capital markets in a big way, industry body Amfi said on Monday.
"The steady shift in savings pattern in favour of equities through SIP(systematic investment plan) in mutual funds has resulted not only in a significant rise in the Indian equity ownership, but also contributing as a strong counterbalance to foreign institutional investors," Amfi Chairman Nilesh Shah said in a statement.
With only 2 crore investors investing in mutual funds, the industry body pointed out the significant untapped potential for growth in the Indian mutual fund space. The statement comes on the occasion of the Association of Mutual Funds in India (Amfi) completing 25 years recently.
Over the last 25 years, the industry body said, it has been at the forefront of ensuring spread of investor education, creating financial inclusion, deepening capital market, bringing global best practices to the industry, improving corporate governance and lowering cost of transactions through economies of scale.
Besides, it facilitated direct employment for over 2.25 lakh people and indirect employment for lakhs of people working with Asset Management Companies (AMCs), custodians, intermediaries and other service providers, the statement said.
The mutual fund industry is one of the large contributors to the government kitty in the form of GST and through the Securities Transaction Tax, which is applicable on equity market transactions. These contributions, as per back of the envelope calculations, add up to around Rs 6,500 crore per annum. As compared to other savings and investments, mutual fund industry has very few tax advantages, resulting in very miniscule revenue loss to the government.
"Amfi"s initiatives to increase awareness of the category, right from ground level investor awareness programs organized by AMCs to the successful "Mutual Funds Sahi Hai" media campaign, have helped reach out to larger retail audience and create awareness," Amfi Chief Executive N S Venkatesh said. From largely an urban and institution focused industry, mutual funds industry now has over 15 per cent of assets coming from beyond the top 30 cities and 52 per cent of assets from individual investors, he added.
"...However, we at Amfi are aware of significant potential, which continues to remain untapped by the mutual fund industry. With just over 2 crore investors out of a population of 130 crore, the industry has a long way to go in the next 25 years," Venkatesh said. Amfi was incorporated in August 1995, when there were around 15 member AMCs. The industry body now has 44 members with assets under management of over Rs 27 lakh crore