CEO Speak July 2023

India’s growth story is here to stay and we at HSBC AMC believe that India’s time is now.

India continues to be one of the fastest growing emerging economies and with our scale at play, India is poised to become the third largest economy in this decade. There are multiple indicators working in favour of this positive momentum, especially the long-term trends. We believe that there is immense opportunity in the growth trajectory of India whether it’s the markets, consumption, wealth generation or the Mutual Fund Industry in specific. This is relevant to both the players in the mutual fund space as well as the investors.

The 3 Ds Effect:

There are many long- term and short- term factors which are providing impetus to our growth, but the below given three factors are key advantages that we have compared to other emerging economies which bring long-term competitive advantage to India.

Demographic Advantage – India is in this sweet spot of having the advantage of a younger workforce which draws investments, jobs and adds to the overall development of the economy. With a relatively young population (median age of approximately 28 years), India not only gets a competitive advantage in terms of workforce but also an opportunity to unleash the consumption power of a young population.

Domestic Consumption – Several data points like mid to high-end segment of automobiles sales, UPI transaction volumes, domestic air passenger traffic, robust GST collections etc are all positive signals towards a healthy domestic market. The domestic market is not just large in size but is also growing in depth as more and more households are increasing their spending power.

Digitisation – India is among the global front runners in terms of digitisation at scale. Be it in the financial transactions space, telephony, skilling or e-commerce - the benefits, uplifting and penetration that digitisation has brought about to common people is a remarkable story. This is long term in nature and the benefits will keep adding up to our economy.

The Indian Mutual Fund growth story- Changing investment habits of the retail investor-

While the markets are breaking records, we are cognizant of the fact, having spent years in these markets that there is going to be volatility and corrections. But the markets will keep growing over the long term. Hence, for an investor who is looking at wealth creation over a long-term horizon, equities must be a part of their asset allocation.

The Mutual fund space is growing in India as the industry crosses the Rs 44 trillion mark. The significance of this growth points towards 2 critical shifts in the investor mindset:

Changing investment habits:

Retail investors have been steadily moving their savings to financial instruments -a shift from the mindset of gold and real estate investments. In the financial instruments space, understanding the ways of the equity markets and finding it prudent to invest into the equity markets through the mutual fund route is the critical shift in the investment habits patterns of the retail investor in the last decade or so. As of June 2023, the number of retail folios stood at 11.9 Crore which has been increasing month on month.

Growing Trust in the mutual fund industry:

Many factors have and will continue positively impacting this industry –

The regulators who have brought in transparency and fair play, the fund houses that have invested in building capabilities, platforms and teams and a collective effort towards investor education.

We find investors today being much more patient with a volatile market than before. The fundamental of investing in the equity markets for the long term as per one’s financial goals is a concept that is being tested in practice by many investors through market cycles now. The growth of inflows showcases the trust that investors have in the fund houses and markets, which is helping them to explore and experience the advantages of investing through an SIP or equity funds.

HSBC AMC is poised better than ever before for staying invested and playing a constructive role in India’s growth story. We crossed 1 lakh crore AUM* as an AMC on July 26, 2023, and we would like to thank all our investors and distributors who have trusted us along this journey. Our fund management philosophy and everyone in the HSBC AMC team is committed to bring the best of products, processes, platforms and services to our investors.

Happy Investing.

Source: AMFI, HSBC Mutual Fund

* https://www.assetmanagement.hsbc.co.in/assets/documents/mutual-funds/en/ea6cffcd-a0b6-4564-bf8d-87585e3b6eac/hsbc-mf-asset-glass-wise-disclosure-of-aum-26-jul-2023.pdf

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