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    Growth in mutual funds' equity assets far outpaces the rise in benchmarks


    AUM of domestic mutual funds grew annually by 19% to Rs 26.9 lakh crore between 2013 and 2019.

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    In a nation where gold and property have been the traditional stores of value for centuries, equities appear to have emerged as a viable alternative in the past five years, underscoring the increasing ‘financialization’ of savings in India. Assets under management (AUMs) in the equity segment of local mutual funds climbed 23% annually, data gathered by Motilal Oswal showed, undergirding the broadest benchmark Nifty 50 through a period of rather circumspect growth across vast swathes of the consumption economy.

    Total equities AUM was Rs 9 lakh crore at the end of 2019 and rose for the sixth year in a row. The share of domestic institutional investors (DIIs) in the BSE 500 companies reached a record high of 14.4% in the September 2019 quarter. MFs invested Rs 4.5 lakh crore in the past 5 years in equity market, outrunning their overseas peers 2.6 times.

    AUM of domestic mutual funds grew annually by 19% to Rs 26.9 lakh crore between 2013 and 2019. A portion of financial savings is gradually moving from bank fixed deposits to MFs. Mutual fund AUM constituted 10% of total bank deposits in 2013, increasing to around 18% now.

    This has resulted in higher investment through the systematic investment plan (SIP) route. Monthly SIP business grew annually by 28% to Rs 8,518 crore between 2016 and 2019. The total SIP AUM was Rs 3.2 lakh crore at the end of December 2019, and accounts for 11% of MF AUM. India’s share of global GDP and market cap exceeds 3%, but its share in MF assets is just 0.7%. This provides room for MF expansion.

    Net household savings in India is around Rs 32 lakh crore annually, the third largest among the major economies. India’s household savings rate of 17.2% of GDP is the second best among the major economics globally, according to an OECD report.
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