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India's MF AUM to GDP ratio low, industry can grow exponentially: Parekh

Tuesday,20 July 2021 07:41 PM IST

Mumbai, July 20

 Noting that India's ratio of mutual fund asset under management (AUM) to GDP is just 15 per cent against the global average of 75 per cent, HDFC Asset Management Company Chairman Deepak S. Parekh on Tuesday said that the country's MF industry has the potential for exponential growth.

Addressing the shareholders of the company, Parekh said that the mutual fund industry overall assets under management rose by 41 per cent year on year to close at Rs 31.4 lakh crore.

Over the last five years, mutual fund industry AUM has seen a CAGR of 20.6 per cent and equity-oriented AUM has grown at a CAGR of 25 per cent.

"Despite the high growth, India's mutual fund AUM to GDP ratio remains significantly low at 15 per cent, as compared to a global average of 75 per cent. Similarly, equity AUM to market cap stood at 5 per cent as against a global average of 30 per cent," he said.

Parekh was of the view that India's penetration levels by any measure remain considerably lower compared to other large economies.

India has more than 50 crore income tax permanent account numbers, but only 2.2 crore mutual fund investors, he said.

The Indian mutual fund industry has the potential to grow exponentially, he said.

"SEBI has done a commendable job not only in terms of regulating the industry but also aiding growth. Global agencies admire India's mutual fund regulatory framework and consider the mutual fund industry among the top in terms of global best practices."

"I hope we can capitalise on this and make our domestic mutual funds accessible to international investors," Parekh added.


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