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From Wikipedia, the free encyclopedia
Mutual funds in India are regulated by the Securities and Exchange Board of India (SEBI). They provide retail investors with access to professionally managed portfolios of equities, bonds, and other securities.[1]
The Indian mutual fund industry has grown rapidly over the past decades. As of 2023, the total assets under management (AUM) were valued at more than ₹40 trillion.[2]
Mutual funds in India are broadly categorized based on their investment strategy:
Each category is regulated under SEBI’s Mutual Fund Regulations and classified with clear risk disclosures.[4]
The mutual fund industry in India has witnessed several controversies involving mismanagement, closure of schemes, and regulatory actions.[5]
In April 2020, Franklin Templeton India announced the closure of six debt mutual fund schemes, citing liquidity issues during the COVID-19 pandemic.[6] This decision affected over 300,000 investors and locked up nearly ₹26,000 crore of investments.
The Indian mutual fund market has also seen a number of mergers and acquisitions, with global firms acquiring domestic players to expand their presence.[8]
| Seller | Acquired By | Year |
|---|---|---|
| ING Vysya Mutual Fund | Birla Sun Life AMC | 2014 |
| Barclays Mutual Fund | BlackRock | 2009 |
| Alliance Capital | Birla Sun Life AMC | 2001 |
| Holding Period | Units redeemed in FY22 | Units redeemed in FY23 |
|---|---|---|
| 0 – 1 years | 56.83% | 50.11% |
| 1 – 2 years | 15.14% | 23.04% |
| 2 – 3 years | 5.03% | 9.81% |
| 3 – 5 years | 20.41% | 13.96% |
| More than 5 years | 2.59% | 3.09% |
In April 2020, Franklin Templeton India unexpectedly wound up six credit funds with assets of close to US$4 billion, citing a lack of liquidity amid the coronavirus pandemic. These funds had heavy exposure to lower-rated credit securities. SEBI conducted a probe and found serious lapses and violations. In June 2021, SEBI barred Franklin Templeton from launching new debt schemes for two years and ordered refunds and penalties.[9]
In 2019, debt schemes of Reliance Mutual Fund faced a liquidity crisis due to exposure to troubled companies (for example DHFL), leading to severe redemptions and forced asset sales, significantly affecting investors.[10]
The 2018 IL&FS defaults had a significant impact on mutual funds, causing downgrades, NAV markdowns and redemption pressures, and prompted SEBI to tighten regulations on exposure and issuer limits.[11]
Defaults by Amtek Auto (2015) impacted several mutual funds; some managers had to suspend redemptions and take emergency measures to manage liquidity and investor exits.[12]
In 2018, redemption pressure on some debt schemes was linked to exposure to Essel Group companies; reporting indicated significant exposure across schemes.[13]
The DHFL defaults created a liquidity crunch for funds holding their securities. Many mutual funds marked down holdings and faced redemptions; regulators increased scrutiny and tightened exposure rules thereafter.[14]
UTI faced a major crisis in 2001 because of large-scale redemptions and mismanagement in flagship schemes (US-64), exacerbated by market scams; the government intervened and restructured UTI in 2003.[15]
Joint ventures and funds with exposure to DHFL were affected when DHFL defaulted in 2019; write-downs and liquidity issues followed.[14]
The Yes Bank crisis and moratorium in March 2020 affected mutual funds (debt schemes with exposure to Yes Bank papers), forcing write-downs and impairments.[16]
In 2019 Kotak faced issues with Fixed Maturity Plans due to issuer exposures; SEBI imposed restrictions on new product launches for a period.[17]
HDFC Mutual Fund experienced mark-downs in some debt schemes (2018–2019) due to exposure to IL&FS and other stressed issuers; investor concerns and redemption pressures followed.[18]
Sahara Mutual Fund and related Sahara entities underwent regulatory scrutiny and SEBI-ordered actions tied to earlier non-compliance and investor refund orders.[19]
Reports suggest some investors are reluctant to invest in mutual funds due to perceived high risk and a lack of information; historically there have been dozens of mutual fund houses in India (e.g., 46 as of June 2013 noted in some reports).[20]
AUM denotes the market value of all the funds managed by an institution on behalf of clients. The article contains an illustrative table of average AUMs for multiple AMCs for quarters (example data in original page).
Example excerpt table (partial / illustrative)
| Mutual Fund Name | Total Schemes | QAAUM (₹ Lakh) | AUM (₹ Lakh) | Change |
|---|---|---|---|---|
| Axis Asset Management Company | 263 | 3,776,454.37 | 3,456,348.88 | +9% |
| Baroda Pioneer Asset Management Company | 111 | 965,630.33 | 925,542.12 | +4% |
| Birla Sun Life Asset Management Company | 806 | 13,678,510.7 | 13,684,493.34 | 0% |
Table: Sellers and the acquiring fund houses (example list from article)
| Seller | Acquired By | Year |
|---|---|---|
| Pioneer ITI MF | Franklin Templeton | 2002 |
| Zurich India AMC | HDFC MF | 2003 |
| Alliance Capital MF | Birla Sunlife | 2005 |
| Standard Chartered (MF) | IDFC | 2008 |
| AIG Global Investment Group MF | PineBridge | 2011 |
| Benchmark Mutual Fund | Goldman Sachs | 2011 |
| Fidelity | L&T Finance | 2012 |
| Morgan Stanley's MF | HDFC MF | 2013 |
| PineBridge MF | Kotak MF | 2014 |
| ING Mutual Fund | Birla Sunlife | 2014 |