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BUSINESS
aseen Sahar, with nearly two decades of experience in the investment management field, has been an active participant in these developments.
TRENDING NOW
India's mutual fund industry has seen remarkable growth over the past decade, with assets under management (AUM) skyrocketing and retail participation increasing steadily. Yaseen Sahar, with nearly two decades of experience in the investment management field, has been an active participant in these developments. As an award-winning industry leader with a wealth of experience, Sahar shares his perspective on how the industry has evolved, the pivotal role of distributors and investors, and where he sees future growth headed.
How has the mutual fund industry in India evolved over the last 10 years?
It’s been quite an impressive journey. The AUM of mutual funds in India grew from about ₹8.25 trillion in 2014 to over ₹66 trillion by August 2024, which is a significant jump. A lot of this growth has been driven by factors like increased awareness among investors, a rising middle class, and supportive regulatory policies. One of the standout developments has been the rise of Systematic Investment Plans (SIPs), which have played a major role in encouraging consistent retail participation. In my articles, I’ve often discussed the importance of these trends in empowering investors.
What roles has the mutual fund distribution community played in this growth?
Distributors have been key in this transformation. As mutual funds have become more complex and diversified, distributors have been instrumental in helping investors understand their options. We’ve seen a notable increase in mutual fund penetration in Tier 2 and Tier 3 cities, which wouldn’t have been possible without the support of this community. The growth in these areas reflects the effort distributors have put into educating and building trust with new investors, especially where financial literacy levels were lower. I’ve engaged with these communities to foster a deeper understanding of the market dynamics.
How have investors contributed to the success of the mutual fund industry?
Indian investors have embraced mutual funds as a means of wealth creation over the years. In particular, SIPs have provided a disciplined approach to investing, which is critical for long-term growth. In July 2024 alone, SIP inflows crossed ₹23,000 crores per month, which shows the level of commitment from retail investors. The shift from traditional assets like gold and real estate to financial products has been transformative, largely driven by greater awareness and access to digital platforms.
What were the key regulatory changes that helped propel this growth?
SEBI’s reforms over the past decade have been crucial. The 2017 decision to categorize mutual fund schemes is one example that stands out. It helped simplify choices for investors, making the market more transparent and accessible. Along with other initiatives, like stricter disclosure norms and better governance practices, these regulatory changes have built a stronger, more trustworthy industry.
In what ways has your guidance contributed to the growth of the mutual fund industry?
While I’ve had the opportunity to be involved in various initiatives, the growth we’re seeing is the result of collective efforts across the industry. I’ve focused on promoting financial literacy through education and advisory services, helping both distributors and investors make informed decisions. There’s been a lot of emphasis on bringing new categories of funds to the market as well, my books and various articles authored by me serve as a guide for investors looking to tap into emerging opportunities and achieve their financial goals. We’ve worked to identify trends and provide investors with insights into opportunities that might not have been immediately obvious.
Can you share any key numbers that highlight the industry’s growth?
The AUM of the Indian mutual fund industry has grown from ₹10.13 trillion in 2014 to ₹66.70 trillion by August 2024. It’s not just about the numbers, though—what’s encouraging is the shift toward retail participation. For instance, SIP accounts have grown from 2.6 crore in 2017 to over 6.5 crore today, reflecting the growing confidence of individual investors in mutual funds as a wealth-building tool.
What do you see as the next major trend in the mutual fund industry?
ESG (Environmental, Social, and Governance) factors are gaining traction, and I think we’ll see a lot more focus on sustainability in the coming years. ESG funds are likely to attract more interest as investors become more conscious about where their money is going. Another big trend will be the continued growth of thematic funds, and passive investing, especially through index funds and ETFs, which are becoming more popular due to their growth potential, lower costs, and simplicity.
How do you ensure continued trust and growth in a highly competitive mutual fund landscape?
Trust is everything in the financial industry, and it starts with transparency. Regular communication with investors, whether through articles, workshops, or one-on-one discussions, is vital. Education is key, and the more we can do to demystify mutual funds, the better. Technology also plays a big role in building trust—AI-driven tools, for example, can help personalize investment advice and improve decision-making, making the whole process more transparent and reliable for investors.
As the mutual fund industry in India continues to evolve, the remarkable growth seen over the past decade is a testament to the collective efforts of investors, distributors, and regulators. Yaseen Sahar's insights highlight not only the transformative impact of increased financial literacy and innovative investment products but also the vital role of technology and sustainability in shaping the future landscape. As retail participation surges and awareness of investment opportunities grows, the industry's trajectory appears promising. With trends like thematic, ESG investing, and the rise of passive funds on the horizon, the potential for continued expansion is immense. All stakeholders must remain committed to fostering trust, transparency, and education to navigate this dynamic environment successfully. The future of India's mutual fund industry looks bright, and with informed decision-making, investors can harness the power of mutual funds to build lasting wealth and contribute to a thriving economy.