Experts believe that although the challenging times for MFs will stay for some time in the near future, but overall, 2010 should be a better year for them, considering the improving economic conditions and relatively good performance by the Indian stock markets. U. K. Sinha, CMD of UTI AMC tells B&E that the Indian MF industry is expected to secure growth in the near future by catering to the evolving aspirations of retail customers. He feels that the industry seeks to target an increased share of the customer wallet through product innovation combined with deeper retail penetration by expanding reach into Tier 2 and Tier 3 towns.
Dinesh Thakkar, CMD, Angel Broking also is of the view that in 2010 the markets would build on the gains put up in 2009. As per him, the acceleration in the economic activity, would hasten the earnings growth for India Inc., supporting the up move. Further, the strong liquidity inflows are unlikely to die down on back of the strong fundamentals and quality of earnings produced by India Inc., supported by reasonable valuations. This all in turn will certainly ramp up the returns garnered by fund houses by several times.
Celent, a Boston-based financial research and consulting firm, too estimates that the industry will grow at a higher rate of 29% in the next five years. “A very high household savings rate and low retail penetration make the market a target for foreign asset managers,” say Arin Ray and Sreekrishna Sankar of Celent. Even as per a latest CII-KPMG report, the Indian MF industry may grow at the rate of 22-25% in the period from 2010 to 2015, resulting in AUM of Rs.16-18 trillion in 2015. And why not? The increase in revenue and profitability of fund houses has not been proportionate to the AUM growth in India in the last five years. Low share of global AUM, low penetration levels, limited share of MFs in the household financial savings and the climbing growth rates in the last few years that are amongst the highest in the world, all point to the future potential of the Indian MF industry. Meanwhile, as research reports suggest, the retail segment is expected to be the largest contributor to the growth of the asset management industry in India and is expected to grow at a CAGR of 35%-42% in the next five years. In fact, during this period AMCs could see an addition of nearly nine million first time retail customers. Not to say, positive economic indicators like higher than expected GDP growth at 7.9% for Q2, better IIP numbers at 10.3%, continuous improvement in auto sales figures are there to provide the much needed support to the industry in 2010.
Dinesh Thakkar, CMD, Angel Broking also is of the view that in 2010 the markets would build on the gains put up in 2009. As per him, the acceleration in the economic activity, would hasten the earnings growth for India Inc., supporting the up move. Further, the strong liquidity inflows are unlikely to die down on back of the strong fundamentals and quality of earnings produced by India Inc., supported by reasonable valuations. This all in turn will certainly ramp up the returns garnered by fund houses by several times.
Celent, a Boston-based financial research and consulting firm, too estimates that the industry will grow at a higher rate of 29% in the next five years. “A very high household savings rate and low retail penetration make the market a target for foreign asset managers,” say Arin Ray and Sreekrishna Sankar of Celent. Even as per a latest CII-KPMG report, the Indian MF industry may grow at the rate of 22-25% in the period from 2010 to 2015, resulting in AUM of Rs.16-18 trillion in 2015. And why not? The increase in revenue and profitability of fund houses has not been proportionate to the AUM growth in India in the last five years. Low share of global AUM, low penetration levels, limited share of MFs in the household financial savings and the climbing growth rates in the last few years that are amongst the highest in the world, all point to the future potential of the Indian MF industry. Meanwhile, as research reports suggest, the retail segment is expected to be the largest contributor to the growth of the asset management industry in India and is expected to grow at a CAGR of 35%-42% in the next five years. In fact, during this period AMCs could see an addition of nearly nine million first time retail customers. Not to say, positive economic indicators like higher than expected GDP growth at 7.9% for Q2, better IIP numbers at 10.3%, continuous improvement in auto sales figures are there to provide the much needed support to the industry in 2010.
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