Andhra Pradesh investors miss out on mutual fund gains
Visakhapatnam: Assets under Management (AUM) for mutual fund companies from investors in Andhra Pradesh stand at approximately Rs 89,000 crore, representing nearly 5.8% of the state’s GDP of Rs 15.4 lakh crore. This figure is significantly lower than the national average of 19.7%, with a total AUM of Rs 67.05 lakh crore against a national GDP of Rs 340 lakh crore.
Among cities in Andhra Pradesh, Vizag has the largest mutual fund portfolio, with Rs 11,500 crore in AUM.
In terms of preferences, Andhra Pradesh investors favour equities, with investments totalling Rs 65,320 crore, followed by fixed income schemes at Rs 15,000 crore and balanced funds at Rs 7,000 crore.
Speaking to TOI, Venkat Nageswar Chalasani, chief executive of the Association of Mutual Funds in India (AMFI), said that mutual fund investments in India have surged from about Rs 10 lakh crore in 2014 to approximately Rs 67.09 lakh crore today. “However, in a global context, several developed countries typically have AUM as high as 65% of their GDPs. Given Andhra Pradesh’s mutual fund investment figures, there is a critical need for improved financial literacy, especially since it is one of the country’s most prosperous states. Despite this potential, many residents may be investing in unregulated markets or low-growth areas, often favouring gold and real estate over regulated financial assets like mutual funds.”
“In this regard, we have adopted Andhra Pradesh, Bihar, and Meghalaya, focusing on areas with suboptimal investment levels. These initiatives aim to promote investor education and engage the public. While general literacy in India is around 75-80%, financial literacy remains could be around 21-22%. This gap prevents many individuals from maximising their savings and generating passive income,” Chalasani said.
“We are working on introducing Rs 250 per month systematic investment plan (SIP) with the market regulator, Sebi, as against the current minimum SIP investment of Rs 500,” said Chalasani.
“Over the past decade, mutual funds have significantly outperformed other asset classes, yielding returns exceeding 15%, surpassing returns from savings accounts, the banking sector, commodities, equities, and even gold. This robust performance makes mutual funds an attractive option for investors, particularly for goal-oriented savings, such as funding a child’s education. By choosing mutual funds, investors can better align their investments with specific financial targets,” added the AMFI chief executive.
Chalasani explained the importance of planning for future costs, particularly with rising education expenses driven by inflation. “To navigate market volatility, there are systematic investment plans (SIPs), which allow for regular, smaller investments, effectively spreading risk over time. This strategy can yield better long-term returns, especially in fluctuating market conditions,” added Venkat Chalasani.