The AUM of India’s fund industry in 2014 rose by 27% year-on-year to $166.7bn, the strongest growth since 2008.
Mutual funds are seeing rising interest from investors beyond the top 15 cities and equity funds are playing a bigger role in second-tier cities, according to local reports.
Over the next few years, online channels such as social media, blogs, online advertisements through third-party websites, webcasts and podcasts, are seen emerging as the most effective and fastest methods of tapping the growth potential in the industry.
The mutual fund penetration rate in the country is only about 7% of household financial assets, offering a wide scope for growth, Cerulli noted.
Managers are also recognising online channels are the most cost-efficient way to increase awareness of products, and this holds true especially for small firms that do not have the resources to set up physical branches in rural districts.
Currently, the use of online channels in the country is “ostensibly still more educational than transactional,” Cerulli said.
Managers such as SBI Mutual Fund, ICICI Prudential Mutual, and DSP BlackRock are frequently posting videos online on YouTube and conducting outreach programs to give investors lessons on the basics of mutual funds.
Smartphone outreach
Smartphones are another medium that investment professionals in India intend to use to reach out to the poorer cities.
Cerulli cited a study by research firm eMarketer, which forecasts India to have at least 200 million smartphone users by 2016, the second-largest number in the world after China.
“Consumers in India are known to have leapfrogged personal computers and gone to mobile, and this medium might be key to reaching out to even more retail investors.”
Managers are currently exploring direct mutual fund sales through smartphones to make transactions easier and seamless for investors.
Some managers have already been optimising the use of SMS or mobile messaging application WhatsApp to send product information to their distribution partners in various cities, the research firm said.
