“I believe the mutual fund sector is going to be huge and could grow dramatically over the next decade,” Agrawal said in an interaction with CNBC-TV18.
He added that the opportunity could extend well beyond the next decade, although projecting numbers that far ahead is challenging. Agrawal expects the top five players in the industry to largely remain unchanged over the next five years, provided they continue to be well managed.
At about ₹81 lakh crore, India’s mutual fund industry is roughly 23% of the country’s GDP and has historically grown at an annualised rate of 22–30%.
Globally, India is the fifth-largest equity market, with a combined market capitalisation of around $5 trillion.In comparison, the United States, the largest equity market with a market capitalisation of about $70 trillion, has mutual fund assets equivalent to roughly 140% of GDP.
China, the second-largest equity market with a market capitalisation of about $11 trillion, has mutual fund penetration of around 18–25% of GDP, while Japan, with a market value of nearly $7 trillion, has mutual fund assets of about 50% of GDP. These comparisons suggest significant room for growth in India’s mutual fund industry.
Agrawal noted that across sectors — including auto, telecom and banking — companies that emerge as volume and cost leaders eventually become profit leaders, typically creating one dominant winner in each segment.
On market outlook, he said moderate returns of 12–15% are realistic as they align with expected earnings growth. He does not expect significant P/E re-rating, with valuations potentially easing from about 21–21.5 times to around 20 times, implying a return potential of roughly 15% over the next 12 months.
