COMPETITION & CONCENTRATION OF THEINDIAN MUTUAL FUND INDUSTRY

Abstract

This paper examines the competitiveness and concentration of the Indian Mutual Fund Industry. The industry is the fastest-growing mutual fund market in the Asia-Pacific region, as witnessed from increased Assets Under Management (AUM) over the years. The already crowded mutual fund industry continues to attract newer financial institutions to start the AMC business, potentially making it to be more competitive in the future. This paper uses the Concentration Ratio (CR4) and the Herfindahl-Hirschman Index (HHI) models to measure the industry competitiveness for the period 2007-2020. Scheme category-level concentrationswere checked, probably the first such documentation in research circles. The study finds that the Indian mutual fund market is competitive and unconcentrated during the study period. Further, it is unconcentrated in equity, debt, and hybrid categories and moderately concentrated in other categories. Findings from this study can help AMC and financial engineers in better product design and positioning and for regulators before allowing entry of new players or mergers.