Mutual fund-related savings are gaining popularity and taking precedence over other forms of investment. Besides, they meet the requirement of the growth capital of the country, said N.K. Prasad , president and CEO of Computer Age Management Services (CAMS), in an interview. Excerpts:
What has been the growth of the mutual fund industry?
The industry has experienced significant growth in the last four years. The CAGR is in the excess of 20%. Last year has been particularly good. All asset classes receiving new money and all investor categories are investing in mutual fund.
Importantly, investors from beyond [the top] 15 cities are participating in mutual fund growth, which is a healthy trend. Overall, [savings through] mutual funds is gaining popularity and taking precedence over other forms of investment.
In the equity category, today we are seeing about ₹23,000-24,000 crore of gross sales every month. The net sales are in the order of about ₹15,000 -16,000 crore for the industry. It is increasing steadily month after month and this is a fantastic achievement for the industry.
How large is the CAMS network?
CAMS is India’s premier mutual fund Registrar and Transfer Agency serving three key stakeholders — mutual funds, investors and distributors.
We provide a full range of services, excluding advisory, for investors of 15 Asset Management Companies. The service canvas includes transaction acceptance and processing, and record keeping and value-added services.
We provide investor and distributors services through a national network of over 260 service centres and multi-locational call centres supported by a large centralised back office. We have built significant scale and specialisation and serve over 2.6 crore live investor accounts.
How have mutual funds scored over other investment modes?
The mutual fund industry is relatively young and has emerged as a well-regulated, transparent and low-cost investment solution. It provides world class service standards and the benefits of diversification, tax efficiency, superior risk- adjusted and inflation-beating returns. Mutual funds offer the benefits of a professional fund manager, who is trained and experienced in generating returns superior to the benchmark.
The returns generated are a function of entry, the longevity of investment and exit from the MF schemes. Several equities and debt funds have repaid multiple times of returns when investments have been held through market cycles. Staying invested for a period of at least 10 years in well-performing equity schemes have generated CAGR ranging 15% to 20%. These are far superior returns when compared to other asset classes.
Which kind of fund is most popular?
Growth funds are the most popular and balance funds are gaining popularity. About ₹20,000 crore is coming in every month, out of which ₹6,000–7,000 crore goes to the balanced category and the remaining ₹13,000 crore is coming into equity funds.
How does the digital advancement feature help?
Technology is the key enabler for this industry because we have to give identical service to the investor in any part of the country. We need technology to capture the financial transaction — the money needs to be invested in mutual funds, the units have to be allocated etc. As an evolved entity, we have to facilitate the transaction in terms of end to end closure.
What percentage of investors comes from the top 15 cities?
Mutual fund penetration started in the big cities (T15). At some point, T15 cities accounted for 96% of the industry assets.
But today, it is steadily giving way to other cities. Currently, 87% of assets are in T15 and 13% of the assets are in B15 (the next 15).
In T15, only 33% has invested in equity and 67% is non-equity whereas in B15 only 22% is held in non-equity and the remaining is held in equity.
