Mumbai: Like discount broking disrupting traditional equity broking business, Indian mutual fund industry is likely to see new players with innovative products, aggressive returns and low fees disrupt the traditional bank dominated asset management business in times to come.
With huge untapped potential due to low penetration, new mutual fund players have started designing differentiated products and are using technology to gain market share with lower fees.
Earlier this year, Flipkart co-founder Sachin Bansal acquired Essel Mutual Fund from the Essel Group in February and renamed it as Navi Mutual Fund.
After Bansal's takeover and renaming, Navi Mutual Fund has launched an exchange traded fund (ETF)—Navi Nifty-50 Index Fund and recently filed offer documents for another new fund offering, again an ETF—Navi Midcap 150 Index Fund.
Trust Mutual Fund which also started at the beginning of the year as a debt focused fund has got good response to its NFOs.
Brokerage Samco Securi-ties is also setting up a mutual fund in India.
Some existing players have matured and are providing competition to older players with new product offerings and superior returns like South Korea based Mirae Asset Mutual Fund as per their AUM growth (Rs 77,674 crore as on June 30), Nippon India Mutual Fund (2.4 lakh crore), PPFAS Mutual Fund (Rs 11,342 crore) and PGIM Mutual Fund (Rs 8,110 crore).
The new fund houses are backed by technology and offer lowest fees due to thier technology driven approach.
Also they offer a low entry even in the new fund offers with Rs 500 minimum investment compared to Rs 5,000 required in other NFOs.
"The Mutual funds space is ripe for disruption with a massive opportunity to create huge value for investors," Jimeet Modi, founder director, Samco Asset Management said.
As on June 30, asset under management of the top five bank sponsored mutual funds SBI Mutual Fund (Rs 5.23 lakh crore), ICICI Mutual Fund (Rs 4.16 lakh crore), HDFC Mutual Fund (Rs 4.16 lakh crore), Kotak Mutual Fund (Rs 2.46 lakh crore) and Axis Mutual Fund (Rs 2.08 lakh crore) own more than half of the total assets managed by the MF industry at Rs 33.17 lakh crore.