Source: RBI
At end-March 2018, there were 45 MF companies registered with the SEBI which managed an AUM of `21,360.4 billion. Of the total AUM, 83 per cent was held by private sector MFs and 17 per cent by public sector MFs. This remarkable transformation has greatly facilitated shifts in household saving patterns. Indian households, which contributed 54.0 per cent of the gross savings of the economy in 2016-17, have historically been risk-averse, preferring investments in physical assets and gold. However, this pattern is slowly changing in the backwash of demonetisation in November 2016 and shifts towards MFs have become large.
With increasing development of the financial sector, the household sector’s savings in physical assets and gold & silver ornaments taken together declined significantly from 60 per cent in 2011-12 to 51 per cent in 2016-17.
COVID-19 and its economic and social disruptions have given new urgency to the challenges facing mutual funds. We expect to see from 2019 to 2025, such as slower growth and shrinking fees. These trends have all accelerated, and mutual fund managers need to move even faster to maintain and improve their positions.