Deepak Parekh, the chairman of HDFC Asset Management Company on June 29 provided an overview of the mutual fund industry, the economy and the company’s operation and financial performance while addressing the 23rd annual general meeting.
He said the year gone by will be always be remembered as a year of robust recovery and return to normalcy despite successive waves of the pandemic sweeping across the world.
Nevertheless, continued disruptions in global supply chains and surge in demand along with the geopolitical tensions have continuously pushed inflation higher, prompting policy actions by central banks.
UPDATE ON THE ECONOMY
“In India, the vaccination drive which started in late FY21, picked up pace and over 80 per cent of India’s adult population was vaccinated by year end. This helped reduce the social as well as economic impact of the omicron wave in fourth quarter of FY22. Economic growth in India accelerated in FY22, as restrictions eased and demand normalised, which was further aided by improvement in exports and supportive monetary and fiscal policies,” he said.
“Rising inflation, however, remains a concern, prompting the Reserve Bank of India (RBI) to undertake an off-cycle rate hike of 40 basis points in May and additional 50 bps in June. The inflation pressure may not subside soon, increasing the possibility of further hikes into FY23,” he added.
He said, going forward, economic growth will be optimistic thanks to a normal monsoon, pick up in discretionary spending robust exports, improved balance sheets of corporate and banking sector and signs of revival in private capex.
“Factors impacting growth outlook that need to watch out for include geopolitical conflicts sustaining for longer, tighter financial conditions, elevated commodity prices particularly crude oil and continued global supply-chain disruptions,” he said.
INDUSTRY PERFORMANCE
As for the mutual fund industry, its overall assets under management (AUM) as of March 31, 2022 rose 20 per cent to Rs. 37.6 lakh crore. The industry added 3.16 crore net new folios and the total count now stood at 12.95 crore. Inflows through systematic investment plans (SIPs) also grew to Rs. 12,328 crore for March 2022 and the industry saw new registrations of 2.66 crore SIPs, he said.
“Despite the healthy compounded annual growth rate (CAGR) of 16 per cent in AUM over the past five years, the mutual fund industry in India remains significantly under-penetrated compared to global averages. India’s MF AUM‑to‑GDP ratio stands at only 16 per cent, compared to the global average of 74 per cent. Our equity AUM‑to‑market cap was at 6 per cent as against the global average of 33 per cent,” he said.
