Buoyed by growing investor interest, the mutual fund industry is gearing up to attract most of the ₹50,000 crore tax sops extended by the government to the middle-class in the Budget by promoting systematic investment plans and selling the India growth story.
The Budget has exempted tax on salary income of up to ₹12.75 lakh per annum through a rebate and standard deduction of ₹75,000.
Sundeep Sikka, ED and CEO, Nippon India Mutual Fund, said SIP is a convenient tool for small savers over the long run and the fund house believes the potential tax savings can be channelised through this route.
“Our focus has always been to be a wealth creator to every Indian and the fact that one in a third mutual fund investor invests with us is a testimony to it,” he added.
New entrants
It is not just the investors, about six new fund houses are expected to jump into MF business this year. Among them, Angel One and Unifi Capital have filed papers with SEBI to launch their new products even while Jio BlackRock, Capitalmind, Choice International and Cosmea Financial Holdings are waiting in the wings.
Akhil Chaturvedi, ED & CBO, Motilal Oswal Asset Management Company, said the fund house’s key focus is to expand the share in SIPs even while offering unique alternative investment products.
Equity investors have matured, and despite market volatility, mutual fund investments continue to gain momentum as investors seek to capitalise on the recent market downturn for long-term gains, he added.
Capital market regulator SEBI has recently laid norms to halve minimum SIP limit to ₹250 a month. About 225 million investors currently invest SIP but a majority are from big cities. Introducing SIPs in sachet size would help take financial investments to smaller towns. As an added advantage, SEBI is considering to allow MFs to offer insurance cover for SIP investors. For FY25, SIPs have more than quadrupled to ₹2.10 lakh crore so far from 2016-2017, per Association of Mutual Funds in India (AMFI) data.
Aashish Somaiyaa, CEO, WhiteOak Capital AMC, said the ‘Mutual Fund Sahi Hai’ is a household adage in today’s world with both investors and MF distributors are meritocratic.
The recent market volatility has amply demonstrated relative safety and outperformance of mutual funds against the benchmark indices and more so MF performance against the direct equity holdings of retail investors, he added.
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