INSUBCONTINENT EXCLUSIVE:
Rising demand for mutual funds on account of growing preference towards financial assets may boost asset under management of domestic money
managers to over $1.1 trillion by 2025
The professional asset management industry in India manages $626 billion as of today and has grown at a 23 per cent CAGR over past three
These asset managers oversee some of the faster-growing asset classes: mutual funds, portfolio management services and alternate
assets.
Considering the prolonged weakness in the real estate market and softer return from gold, there are expectations that systematic
investment plans (SIP) will continue to grow, enhancing businesses of distributors and portfolio management companies in the coming years
Already, sales of companies like Edelweiss Financial Services and IIFL Holdings have grown at a CAGR of 31.42 per cent and 7.48 per cent
over last five years, whereas net profit swelled 39.48 per cent and 17.44 per cent CAGR, respectively, during the same period
Shares of Edelweiss and IIFL have rallied up to 406 per cent in these past three years.
Investors pumped Rs 1.4 lakh crore into mutual funds
data from the Association of Mutual Fund in India (Amfi) shows
awareness campaigns both at the individual as well as at industry levels.
Monthly SIP contribution has doubled to over Rs 7,000 crore in
March 2018 from Rs 3,000 crore registered in April 2017
Global brokerage Credit Suisse expects the current trend of increased mutual fund investments to continue, thanks to rising preference for
financial assets in savings, continued weakness in the real estate market and settling in of habits (SIPs)
The brokerage projects long-term MF AUM growth rates to remain healthy at around 16 per cent
opportunity in the mutual fund industry
As far as the percentage of equity assets is concerned, we believe there is a very big opportunity for us both in debt and equity, but our
focus will remain on equity
managers that are ahead of the curve are likely to benefit the most
Credit Suisse highlighted that distributors or wealth managers like Edelweiss and IIFL Holdings stand to benefit the most, especially since
they are already ahead of the curve in nurturing alternate assets.
The brokerage has initiated coverage on Aditya Birla Capital with an
ABCL is one of the top three players in the mutual fund business, with growing market as well as equity share
Credit Suisse is bullish on the company with a target price of Rs 175.
Shares of the company traded around Rs 147 on May 31, down over 40
JM generates superior return on assets on its lending business, with higher yields and lower credit costs against peers, and the group is
conservative on leverage levels
There is a significant opportunity for these companies, as India lags in savings in financial assets compared with developed economies
Credit Suisse expects asset management companies to post 22 per cent profit growth CAGR till 2025
