Walmart-owned digital payments company PhonePe has partnered with Aditya Birla Sun Life to launch a new investment solution Super Fund that would invest in equity, gold and debt funds of multiple mutual fund companies.
Walmart-owned digital payments company PhonePe has partnered with Aditya Birla Sun Life to launch a new investment solution Super Fund that would invest in equity, gold and debt funds of multiple mutual fund companies. Based on the risk appetite and investment style, users (investors) could choose between aggressive, moderate or conservative options to invest. PhonePe, which competes with SoftBank-backed Paytm, has been adding multiple layers of financial services to evolve into a one-stop-shop for multiple products beyond digital payments. The company claimed over 200 million registered users and offered gold buying, tax-saving funds, liquid funds, international travel insurance and also an insurance product for the COVID-19 pandemic.
The option for aggressive investors have a higher proportion of equity funds, the conservative option has a higher proportion of debt funds while for moderate investors, there’s a mix of equity, gold and debt. The fund, which will “help investors create long-term wealth,” PhonePe said, will be monitored by Aditya Birla Sun Life Mutual Fund managers who would also make changes as per the market conditions and if the performance of the underlying funds and AMCs change. The investment would be from Rs 500 onwards.
Importantly, the penetration of mutual funds in India is significantly lower vis-à-vis other countries. For instance, the US has AUM more than its GDP at 103 per cent while for India it is only 11 per cent and 55 per cent is the global average. India’s equity mutual fund AUM to GDP ratio is 4 per cent in comparison to 63 per cent in the US, according to the CAMS DRHP. However, the growth in India has been on the back of the mutual fund industry’s AUM growth at close to 24 per cent CAGR between March 2014 and March 2019.
The new fund will allow PhonePe users “create wealth in a simpler and safer way as all the complex investment decisions of finding the right balance between equity, gold and debt; selecting the top funds from over 1,000 options; and continuously reviewing and rebalancing the investments to suit market conditions will be managed by expert Fund Managers,” said Terence Lucien, Head of Mutual Funds, PhonePe in a statement. CAMS DRHP had said, citing a CRISIL report, that tax incentives to India Inc along with formalization of the economy, rise in financial inclusion, growing disposable income level, and investible surplus, growth in financial savings, and schemes from the government aimed at enhancing investor awareness can boost the mutual fund sector further.