The mutual fund industry has witnessed tremendous growth over the last few years as the trend towards financialization of savings gains momentum. From Rs 24.28 lakh crore in May 2020, the mutual fund industry assets have grown to Rs 42.94 lakh crore in May 2023. (Source: AMFI).
Mutual funds are an ideal vehicle for investors to participate in the structural growth story of India. The Indian mutual fund industry will be a key beneficiary of this trend. “As India’s per capita income rises, there is a hugely disproportionate increase in money available for discretionary consumption, saving and investments. We took 67 years approximately to get to a $1000 per capita and then in 10 years we have crossed $2000 per capital income. This has created a savings boom which has fuelled the MF industry’s growth from Rs 10 lakh crore to Rs 40 lakh crore – 4x growth in ten years. If our nominal growth is expected to be around 10-11% going forward, then the next doubling will happen faster – in 6-7 years. There could be a significant jump in corpus available with households for discretionary consumption, saving and investments as we see increased financialization and reduced friction. The multiplier effect would be non-linear, and we could have the industry potentially reach Rs 200 lakh crores,” says Ajit Menon, CEO, PGIM India Mutual Fund.
Another encouraging trend is growing participation of investors in mutual funds from smaller towns. Around 17% or Rs 7.30 lakh crore of the assets are concentrated in B30 locations as of May 2023.
PGIM India Mutual Fund has been continuously enhancing its service capabilities, introducing new features in our digital platforms available to investors and distributors and expanding the distribution network. The number of empanelled distributors with PGIM India Mutual Fund has increased from 681 in March 2022 to 800 in March 2023.
Buoyed by our growth journey and the resilience and growth exhibited by the Indian economy, PGIM India started two new businesses – International and Alternate Investment Funds from April 2023.Srinivas Rao Ravuri is leading PGIM India’s new international business while Aniruddha Naha will lead the new AIF business as CIO Alternates. Vinay Paharia has come on board as CIO for equities and fixed income businesses from April 2023.
Mutual funds are an ideal vehicle for investors to save for their long-term goals like retirement. PGIM India Mutual Fund Retirement Readiness Survey 2020 shows that among those who do have investment in mutual funds, 49% stated they had a retirement plan. Further, the survey shows that Indians are focusing more on current expenses than future planning. Retirement planning is positively correlated to income, not age, showing that Indians plan for retirement when they have surplus money, and can save without sacrificing current comforts.
PGIM India is dedicated to helping Indians make themselves financially secure, through a range of financial planning awareness initiatives, and through innovative products and services customized to the needs of Indians. One such initiative is Money and Me, an investor education initiative, which hosts bespoke content catering to different age groups. “Following a sequence in financial planning can possibly take care of your finances to a great extent. The right order or sequence can be to start with a Household Budgeting exercise, then buy protection through Life Insurance, followed by Saving (which includes an emergency corpus) and lastly, Investing the remaining corpus (which includes tax optimization). Within the Investing stage, there is a need to prioritize Retirement planning since that’s the only financial goal for which one can’t get a loan,” adds Ajit.