With 30% CAGR, MFs Size Likely To Be Rs.9.50 Lakh Crore By 2010

Domestic Mutual Funds (MF) Industry will grow at CAGR of 30% in next 3 years to touch its level at Rs. 9.50 lakh crore from Rs.4.67 lakh crores in July 2007 with contributions of private, public and joint sector mutual funds players, staying around respectively 70%, 20% and 10%, according to The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

In a Paper on `MF Growth Patterns’, brought out by ASSOCHAM, it is highlighted that in view of growing awakening and certainties prevailing in MF industry, its market penetration would more than double by 2010 from about 4% now as gradually mutual funds are becoming preferred savings instrument for urban and rural folks.

Comparing India’s MF industry with that of US, the ASSOCHAM findings, however, reveal, `despite domestic MF growing at substantially higher rate in last 3 years, it is still 100 times behind US MF industry. Its size in is currently estimated at over US$ 12 trillion as against Rs. 4.67 lakh crore of India with market penetration of 4% of India’s total population, compared to 49% in the US and 20% in UK. In India, MF industry manages nearly 700 schemes while US MF industry has more than 12,000 MF schemes’.

Domestic MF industry which currently forms 10% of its GDP remained tightly regulated and was opened for private sector after 1993. Despite, its performance and track record exceeded between 1999 to 2007 and the industry grew at over 25% CAGR and the trend will improve further as investors, particularly retail ones are choosing a good chunk of their savings volumes towards MF. It is because of this reason and other supportive favourable conditions, the MF industry will grow and touch the projected level of Rs.9.50 lakh crore by 2010.

Currently, the share of privately managed MF players in the total MF industry size of Rs. 4.67 crore is estimated at 82% which will fall to nearly 70% since private sector MF players would like to forge alliances with their overseas partners in the joint sector.

The public sector share in current MF industry size will go up from nearly 20% from less than 10% now and that of joint sector to about 10% from 8% now.

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