The country's burgeoning mutual fund industry is expected to see its assets growing by 29 per cent annually in the next five years, with high household savings rate and low retail penetration attracting foreign asset managers, a report has said.
"The total assets under management in the Indian mutual funds industry are estimated to grow at a compounded annual growth rate (CAGR) of 29 per cent in the next five years," the report by global consultancy Celent said.
The pace of the growth in assets is expected to be higher in the years ahead as compared to the CAGR of 25 per cent witnessed in 2004-2009 period.
"A very high household savings rate and low retail penetration make the market a target for foreign asset managers," the report added.
However, the profitability of the industry is expected to remain at its present level mainly due to increasing cost incurred to develop distribution channels and falling margins due to greater competition among fund houses, it said.
Celent estimates the retail segment, which at present contributes just 37 per cent of the assets, to grow at a 35 per cent compounded annual growth rate for the next five years, driven by rise in income and awareness of MF products.
Meanwhile, institutional investors dominate the market with contributions of 56 per cent in assets.
The pace of the growth in assets is expected to be higher in the years ahead as compared to the CAGR of 25 per cent witnessed in 2004-2009 period.
"A very high household savings rate and low retail penetration make the market a target for foreign asset managers," the report added.
However, the profitability of the industry is expected to remain at its present level mainly due to increasing cost incurred to develop distribution channels and falling margins due to greater competition among fund houses, it said.
Celent estimates the retail segment, which at present contributes just 37 per cent of the assets, to grow at a 35 per cent compounded annual growth rate for the next five years, driven by rise in income and awareness of MF products.
Meanwhile, institutional investors dominate the market with contributions of 56 per cent in assets.
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