Overview of MF Industry & Growth Prospects

Phase One: 1964-1987 (Establishment of UTI)

The mutual fund industry witnessed its launch with the formation of UTI in 1963. It reported Asset under Management (AUM) of 6700 crores at the end 1988.

Phase Two: 1987-1993 (Entry of Public Sector Funds)

SBI Mutual Fund was the first 'non-UTI' mutual fund established (June 1987) & other public sector banks followed with their own fund houses.

At the end of 1993, AUM of the sector was Rs47, 004 crores.

This phase holds immense importance in the history of mutual funds as it also brought the industry under a formal regulatory framework through The Securities and Exchange Board of India (SEBI).

Phase Three: 1993-January 2003 (Entry of Private Sector Funds)

The impact of economic liberalization initiatives introduced in 1991 to expand trade and offer customers more choices cascaded to the mutual fund industry as well. The year 1993 marked the entry of private sector funds to bring transparency in the operations, introduce innovative products and provide superior customer services.

The erstwhile Kothari Pioneer (now merged with Franklin Templeton MF) was the first private sector mutual fund registered in July 1993. About 11 private companies, along with many foreign sponsors set up their shops by the end of 1994-95.

In 1995, Association of Mutual Funds in India (AMFI) was incorporated with an aim to act as a chief governing body of all Asset Management Companies (AMC), and promote ethical and professional code of conduct in the mutual fund sector.

As at the end of January 2003, there were 33 MFs with total AUM of Rs 1, 21,805 crores, out of which UTI alone had AUM of Rs 44,541 crores.

Phase Four: February 2003-till date

2003 to 2008 saw a phase of consolidation of Mutual Fund industry with numerous mergers and acquisitions.

Toward the end of 2008, the securities market of India, much like the rest of the world, tumbled. Owing to the global economic crisis in 2009 the growth of the industry remained dismissal between 2010-2013.

In 2012, in order to bring a fresh breath of air in the industry, increase investor confidence and help it recover, SEBI announced a series of’re-energising' measures. The positive impact of these measures was also seen when industry's AUM crossed Rs. 10 trillion for the first time in May 2014 and registered a fivefold jump in AUM in 2016 since 2007.

The Present

Mutual fund investment still accounts for only 7% of total investments by individual investors in India and AUM: GDP ratio is a mere 11%, (In contrast the size of MF industry in USA is $20 trillion and growing which is same as it's GDP (i.e. 100% of GDP), indicating MF industry in India still has the potential to grow 5-7 fold), an indication of the tremendous untapped potential.

Technology is enhancing the growth of mutual funds in the form of paperless transactions (for eg. e-KYC, BSE Star MF, NSE NMFII, digital wallets).

The Association of Mutual Funds in India (AMFI) is dedicated to developing the Indian Mutual Fund Industry on professional, healthy and ethical lines and to enhance and maintain standards in all areas with a view to protecting and promoting the interests of mutual funds and their unit holders.

AMFI was incorporated in 1995, as a non-profit organisation. AMFI is the association of SEBI registered mutual funds in India which are managed by registered Asset Management Companies. As of now, all the 44 Asset Management Companies that are registered with SEBI are its members.

Assets under Management (AUM) as on May 31, 2019 has crossed a landmark of 25 Lakh crore and almost touched a new high of 26 Lakh crore. AUM as on 31-May-2019 stood at Rs. 25, 93,560 crore.

AUM as on 30-June-2019 stood at Rs. 24, 25,040 Crore.