Venkatesh expects large inflows to continue in the mid-cap category in the coming months as well given the attractive valuations of midcaps.
The mutual fund industry is poised to grow at 15-20 percent in the next financial year (FY21) driven by inflows in the debt and equity schemes, said NS Venkatesh, Chief Executive, Association of Mutual Funds in India.
"Year-on-year, the asset under management of the mutual fund industry has grown 19 percent and next financial year we expect it to grow at around 15-20 percent," Ventakesh said on a media concall to discuss January monthly data.
The AUM of the industry has increased to 27.85 lakh crore in January 2020 from Rs 23.37 lakh crore in Jan 2019, an increase of 19 percent, while in the current financial year (FY20), the industry has shown a growth of 12 percent.
AMFI's data for the month of January 2020 indicates that the mid-cap category witnessed the highest inflows of Rs 1,798 crore within the equity schemes as against inflows of Rs 321 crore in December.
Venkatesh expects large inflows to continue in the mid-cap category in the coming months as well given the attractive valuations of mid cap stocks.
"We believe valuations have taken a large beating in the mid-cap space. We expect robust inflows in this category going ahead," said Venkatesh.
In the period between Jan 1, 2019-Jan 31, 2020, the BSE Mid-cap Index was up merely 0.2 percent while in the current fiscal year, BSE Midcap index was down 0.63 percent.
Union Budget impact
He also said the Union Budget was ‘pro-growth’ and pro-investments’ which will also aid inflows in the 43-player mutual fund industry.
Speaking on demand of equity-linked savings scheme (ELSS) post the announcement of the new and old tax regime in the budget, Venkatesh said: "People who are in the higher end of the tax bracket will continue to invest in ELSS schemes and so demand may not taper off."
In her Budget speech on February 1, Finance Minister Nirmala Sitharaman said a salaried professional opting for a lower tax rate under the new regime will not be eligible for deductions, including insurance premium paid and ELSS investments.
Tax experts feel, the removal of 80C benefit may pose a risk to ELSS schemes. Tax exemptions are an important incentive for the purchase of ELSS schemes.
ELSS or a tax saving mutual fund schemes helps investors to save taxes under Section 80C of the Income Tax Act 1961. The investments in ELSS are subject to a lock-in period of 3 years and qualify for a tax deduction of up to Rs 1.5 lakh.Exclusive offer: Use code "BUDGET2020" and get Moneycontrol Pro's Subscription for as little as Rs 333/- for the first year.
