Dun & Bradstreet India’s Leading BFSI Companies 2017

The AUMof Indian asset management companies increased from ` 8,252 billion in FY14 to ` 12,328 billion in FY16, registering a growth of CAGR 22.2%. Income funds with ` 5,655 billion in assets accounting for 45.9% of the total AUM in FY16 is the biggest fund in terms on size. The large size of the fund can be attributed to the dominance of institutional investors with large ticket size who primarily choose to park their excess funds for short terms whilst earning attractive returns. Non gold ETFs registered the highest growth of CAGR 88.3% for the period FY14-FY16. The ETF funds too were dominated by institutional investors. The simplicity of ETFs as it is based on popularly known underlying, passive investment strategy, liquidity, and lower management fees make ETFs an attractive investment option.

Equity assets had a larger holding period compared to non-equity assets

Source: AMFI

The average holding period of investments in equity assets was significantly longer compared to the investments in non- equity assets by asset management companies in India. Majority of the equity investments, accounting for 39.5%, were held above two years, while majority of non-equity investments, accounting for 51.3%, were held for less than six months. The dominant source of return in equity investments is capital gains. In the equity market achieving any significant capital gain requires holding the securities for longer periods. This can be attributed to why majority of the equity investments are held over two years. In FY16 the Indian mutual fund industry had 50.6 million accounts The number of accounts in India increased from 44.4 million in FY15 to 50.6 million in FY16, registering a growth of 13.9%. The majority, accounting to ~99%, of these accounts held by individuals comprising of retail and HNI accounts. Due to the sheer volume of investor accounts, individuals are dominant in all categories of funds such as equity, debt, liquid/money market, ETFs, and FoFs ranging from 94.4% to 99.2% of all accounts held in these funds. However, stark differences can be observed when the AUM of these funds are compared. As of November 2016, 55.4% of the mutual fund assets in India are held by institutions and 44.6% are held by individuals. In addition for the period November 2015 to November 2016 institutions registered a growth in assets of 28.9% and individuals registered a growth in assets of 23.0%.

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