The rating agency believes independent research and analytics will be a key facilitator. The past couple of decades have seen the Indian mutual fund (MF) industry gain currency and create an edge for itself in the personal finance space, and raise the share of Indian households in the overall savings pie.
“Over the five years through 2025, CRISIL expects the industry’s assets under management (AUM) to continue its double-digit growth and cross the Rs 50 lakh crore mark. Equity funds are expected to vanguard this growth trajectory, with their share expected to rise from 42% today to 47%, in line with global peers,” says Ashu Suyash, MD and CEO, CRISIL.
Some of the growth triggers include India’s favourable demographics, increased financialisation of savings, an inflation-targeting regime, and rising per-capita income.
Crisil believes the need for independent research and analytics has grown manifold, because of the growing range and complexity of products, increasing market volatility, a wider and savvier investor base, and changing intermediation models. Independent mutual fund rankings play an important role as they follow neutral and relevant criteria, afford objective decision-making, and enhance investor confidence in the long run.
“When selecting funds, it’s important for investors to look at the attributes of the underlying portfolio, too, and not just focus on a performance yardstick like net asset value (NAV),” says Amish Mehta, COO and President, CRISIL.
Amish points out that a high percentage of debt funds with significant exposure to defaulted papers since mid-2018 were ranked low at CMFR 4 and 5 – when the underlying papers defaulted – compared with the higher rankings given to them elsewhere based on just NAV. Such insights could help stakeholders take timely decisions.