HDFC Asset Management Company Ltd
NSE:HDFCAMC
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Ladies and gentlemen, good day, and welcome to the Q2 FY '23 Earnings Conference Call of HDFC Asset Management Company Limited. From the management team, we have Mr. Navneet Munot, Managing Director; Mr. Naozad Sirwalla, Chief Financial Officer; and Mr. Simal Kanuga, Chief Investor Relations Officer. I now hand this call over to Mr. Simal Kanuga, who will give us a brief following which we will proceed with the Q&A session. Thank you, and over to you, sir.
Thanks, Stephen. Good evening, everyone. The results along with the business update presentation is available on our website and also on the site of the exchanger. As usual, we will begin with a quick overview of what has happened in the industry during the quarter. So our industry closed the quarter with an AUM of INR 38.4 trillion and equity AUM of INR 19.3 trillion. Quarterly equity net flows for industry continued to remain strong at INR 504 billion. Of course, that was lower as compared to INR 783 billion for the quarter ended June '22 and INR 685 billion for September 2021. We would like to definitely qualify that equity flow number includes index funds and currently, index funds include both equity and debt index funds. However, we can get some perspective from AUM of debt index funds. The AUM debt index funds stood at INR 575 billion for quarter ended September 22, increasing from INR 417 billion at the end of last quarter. That's the June quarter, a net addition of INR 158 billion to the AUM.
As this is fixed income, a large part of this growth is through inflows. If we net this number of from inflows, quarterly inflows into equity and equity oriented funds, including equity index funds, but excluding AUM growth in debt index funds, was INR 346 billion for quarter ended September 22. The comparable number for quarter ended June '22 was INR 642 billion. Of this number of net flows, excluding debt index fund, which is INR 346 billion, NFO has contributed to the tune of INR 104 billion.
On the debt mutual fund front, we continued to see outflows. Industry loss INR 293 billion in the current quarter as against INR 178 billion in the previous quarter. We should add debt index funds and debt EPF numbers here. So for the current quarter, net funds, including debt index funds and debt ETF, outflow numbers was approximately INR 60 billion. Liquid funds witnessed net inflows of INR 191 billion, and others as a category, which is ETF arbitrage fund of fund investing overseas saw inflows of INR 71 billion. Individual investor folios now stand at INR 137.3 million and individuals as a category are contributing to the larger part of the AUM and now accounts for 57%.
In terms of AUM, B30 contributed 17%. But if you look at equity AUM, the number is 27%. SIP flows for the month of September remained robust at INR 19.76 billion. We'll now move to -- we closed the quarter with an AUM of INR 422.2 billion, so INR 422.2 billion. Our market share in quarterly average AUM on overall basis and excluding ETF was 11% and 12.3%, respectively, more or less similar to what we saw at the end of June 2022. In terms of actively managed equity-oriented AUM, our market share stood at 11.5%, same as that of quarter ended June 2022, and this is despite flurry of NFOs during the quarter. We did not have any NFO in this category.
Of the industry net sales that came in during the quarter, nearly INR 104 billion was contributed by NFOs. We propose to launch a thematic fund business cycle fund sometime in November. Our quarterly average market share in debt and liquid category was more or less constant at 13.7% and 13.2%, respectively. Our systematic transaction book saw a healthy growth. We processed 3.91 million transactions, totaling to INR 14.3 billion in month of September 2022, up from 3.73 million transactions, totaling up to INR 12.8 billion in month of June 2022.
We continue to enjoy a favorable asset mix as compared to that of the industry and also favorable ratio in terms of AUM from individual to nonindividual investors. Before we move to financials, a quick update on new launches during the quarter. As we have stated in our previous calls, we are in process of expanding our product range on the passive side. During the September quarter, we launched 6 ETFs, including a silver ETF. Even in the current month, we actually closed 2 more smart beta ETFs. We now have a couple of strategies live on PMS side and also recently launched our CAT II AIF fund of funds, which is investing across VC and PE funds.
Now we move on to financials. For the first 6 months of the current financial year, we have reported revenue of INR 11,818 million and profit after tax of INR 6,783 million, a revenue degrowth of 3%, but an operating revenue rising by 2%. Total profit de-grew by 2%, while the operating profit from core asset management business was flat. It would also be impertinent to mention that the employee benefit expense includes noncash charge.
The number for the current financial year is INR 212 million and the corresponding number for last year was INR 343 million. In terms of quarterly numbers, revenue from operations was flat, while profit after tax has seen an increase of 6% on Y-o-Y basis. Our operating profit margin as basis points of AUM stood at 36 basis points for half year ended September 2022, with operating revenue margin at 50 basis points. So thank you very much, and we'll be happy to open up for questions now. As even suggested, both Navneet and Adata very much in the same room. Thank you very much.
The first question is from the line of Kunal Thanvi from Banyan Tree Advisors.
So I had 2 questions. One was on our revenue yield if we see sequential. There has been some improvement from, say, 17 to 51 bps in this quarter. I wanted to understand the key reason behind it. Is it expansion of TR in data equity? Or is this simply because of the better equity mix that we have seen in this quarter? That is one. Second is on overall debt side of the business, what we see for the industry and for us, we've been seeing a lot of outflows [indiscernible] if you can share your thoughts on what are the factors that are leading this kind of out for the industry and for us. And thirdly, if I can squeeze last one is on the SIP market share again, like we've seen 2 -- the last 2 quarters after bottoming out in 4Q FY '22, you've seen some improvement in SIP market share. If you can put some comments, what are the reasons behind it? What is that difference we are doing in terms of distribution. We understand that performance has improved in the last 1.5, 2 years. Apart from performance, are there any other levers that we are working to improve the SIP and overall equity market share?
Kunal, on the margins, I think you rightly mentioned, it's due to the better asset class mix. So equity proportion in the overall AUM has gone up, and that has resulted in the margin improvement. Your second question was on the overall outflows in the debt market. I think if you have a rising interest rate environment, that's when you get the outflows from the debt fund historically. We have seen that in part as well. But if you ask me going forward, I see a great opportunity emerging out of this. Once rate starts stabilizing, we have stated in past this could be a start of acceptance of debt funds by retail investors. I think if we look at the industry progress over the last couple of years, there has been tremendous focus on -- I'm talking about the retail investors or the individual investors.
There has been tremendous focus on the equity funds, equity ownership among retail investors has gone up, not so much on the fixed income side. But I think with yields where they are currently, over a period of time, I think there is tremendous potential for us to reach out to a large number of individual investors and offer our debt product. I think also, as Simal mentioned in his opening remarks, it's important to see the number of the debt outflows in conjunction with flows into the debt ETFs and the debt index fund. So if you add these 2 numbers, the net outflow number would come to approximately INR 60 billion or so. So there have been outflows, but there are inflows into the debt ETF and that index. There the outflows from the open-ended debt points, but there are inflows into the debt index and debt ETFs. Your third question was on the systematic transaction. As you know, I mean, systematic transactions at [indiscernible] include SIP as well as STP. I mean, we used to be a pioneer in that space over the last several years, the DFC as an AMC has been investing very heavily in promoting the concept of SIP.
Last couple of years, of course, we lost some bit of market share for a variety of reasons that we would have discussed over the last several quarters, but we have stepped up our efforts a couple of quarters back. And I think it's a mix of a variety of things, including better engagement with our distributors, our partners, it's our enhanced marketing and communication efforts. -- system and digital platform, I think our transition from client services to client delight, which I've been talking about for the last several quarters. And then of course, the improved performance, which is getting recognized by investors and our partners. I think a combination of all of these things. But as a house, again, as I mentioned, we used to be a pioneer. We lost market share, but across all channels, I think at our end, there is a tremendous focus on getting our market share back on the systematic transactions front.
The next question is from the line of Prayesh Jain from Motilal Oswal.
Just a few questions from my side. Firstly, just extending the point on the [indiscernible] front, while definitely the mix that would have played out, is there any trends that we've seen early on the debt is moving higher with regards to charges or possibility of charging a better TER, -- that is point number one. Secondly, our OpEx to AUM ratio is possibly higher than what we've seen in the past around plus bps. What is the outlook going ahead with regards to this number? I understand you all have guided in that range only, but it's still just beyond that range. Do you think that we can see a better number out there? Thirdly, on the -- what's the strategy on the alternate assets have been -- like in the last few quarters, you have mentioned that you have formalized the strategy and expect scale up in this space. So what is the kind of traction we've seen and what are the plans going ahead? And my last question will be on the tax rate, which is slightly higher at 26% plus. Any thoughts around this? Yes, those would be my 4 questions. Thanks.
The first on the yield on the debt side, I think it's been pretty stable. There's hardly any change on that front. Second, on the overall expenses as a percentage of AUM. So yes, it's been like that 13, 14 basis points. Maybe over a period of time, as AUM increases, there will be scope for improvement there. But otherwise, as we have been guiding that there are a few items like technology on people, on business promotion as a travel is back as business promotion is back, some bit of expenditure has gone up. And we are investing in sweaters. We are very optimistic about the industry in general and for us to gain market share over a bit of time. So we would be very keen to invest at this point in time.
On the alternative side, I think as Simal mentioned earlier, we have already launched -- there are multiple things that we are doing different. You will see enhanced level of activity in alternate space over the next several quarters. We have it on our radar and look forward to building a state of the art alternate business that I've been mentioning over the last several quarters. We launched our Category 2 AIF fund of fund this quarter. And going forward, we will further expand our portfolio on that side. Just, I mean, related to that PMS business, and we are fairly clear in our mind on how we want to build that business. And in line with this, we launched India Ascent strategy in addition to the all-cap strategy that we launched last quarter. So on the non-mutual fund business side, I think both PMS and alternatives, we have ambitious plan over the next several years.
Yes. On the tax front, I think it's about 36%. [indiscernible] bit materially different there a bit of disallowances of provisioning, but it's 25% rate, which is prelet.
Ok and just Navneet could you just give some thoughts on how do you see the yield in the previous quarter when the yields moved up possibly after a long time, you mentioned that it was kind of not something which is structurally change -- structually any change in the new structure. But we've again seen an increase in this quarter. We are happy to see that number. But how do you -- how do we see this going ahead?
So that's -- I mean that's a result of the asset mix changing as we mentioned earlier. On the fixed income side, it's been pretty stable on the liquid side of our business. That's been pretty stable on the equity side. I think you've -- we've discussed this earlier, and maybe I'm just repeating what we would have said earlier that, one, I mean, the increase in AUM is per the formula of the sliding scale of TERs gets adjusted over a period of time as we moderate commissions for new flows to an extent. And in this quarter -- over the last couple of months are a couple of our key AUM would have surpassed the INR 5,000 crore multiple, and that would have had impact of couple of basis points.
As we have been guiding continuously, our book margins are at a substantial premium to the flow margin, and the new business is happening at lower margins. Of course, we are seeing some green shoots in terms of how LFOs have been priced compared to where it was in the first half of the last financial year. Statistically, the pace of dilution of fields may slow down going forward as the gross flows as a percentage of AUM may be lower as compared to the last year. Yes. Otherwise, as we have always maintained the loss in yield should get compensated by favorable asset mix, which we have seen in this quarter. And furthermore, I mean, the growth in our business over longer term should more than make up for falling years.
The next question is from the line of [ Ameya Gawande ] from [indiscernible].
Yes. Good evening, everyone. So I just have a couple of questions from my side. First is from a 5 years perspective as industries growing and evolving at a fast pace and has a lot of space. What will be your strategy in this competitive environment for growth in the market share and achieving the operating leverage?
For 5-year strategy. I mean, over the last 5 years, we have seen the pace at with the IP book has grown, we have seen the way the overall equity AUM has grown. I think the financialization of savings is a trend, which has just picked up, but we have a long way to go whether you look at our AUM as a percentage of GDP, whether we look at our AUM as a percentage of market cap, whether you look at percentage of money that we get as a proportion of the overall household savings, I think we have a long way to go, but mutual funds are clearly becoming one of the preferred vehicles for investing for a large number of investors. I think the number of unique accounts have grown very substantially in the last 15, 18 months from a little over like INR 2.5 crores to almost INR 3.5 crores. And to us, this is just beginning. And as we have mentioned, I think, in some of the earlier calls that we have set a very ambitious mission for ourselves, which is to be the wealth creator for every Indian.
And as I said, that as of now, there are just like a little over INR 3.5 crore unique investors. But if you look at the number of people who have been -- people, I mean, who have passed for our people, I think -- I mean, of course, the bank account numbers are much, much higher. But over a period of time, we believe that the total addressable market for the industry is very, very large. Within that strategy for us, I think we have the best-in-class product range. We have one of the best, I would say, a long-term performance track record of several of the funds within that.
We have continuously been expanding our product book to ensure that we remain a one-stop solution for investors, whether it's on our distribution side, we have an outstanding franchise. I mean across the country with 228 branches and the number of distributors that we serve. Across all channels, we remain highly focused to have the best possible market share across all channels. I think they're investing heavily on the digital side and technology and in marketing and in all of these fairs to ensure that we make the most of the opportunity that industry presents.
And also, I would like to have your thoughts on the risks due to global economic environment, like whether it may be inflation interest rate hikes or geopolitical tensions. How it might hamper the business and the mitigation part?
So you're talking about the fixed income part of our business because the yields are going up and is tightening?
Yes...
So of course, I think we have seen outflows from the fixed income front, but the interesting part that we mentioned earlier is that we are clearly seeing interest of retail investors and that index fund and that TTS. And going forward, of course, given the higher commodity prices or the higher inflation, the accelerated tightening by the major global central banks, they are putting upward pressure on yields. And then going forward, maybe higher supply of state development loans, which has been muted until now, is likely to pick up in coming quarters.
So this can put further upward pressure on yields, given the high SLR holdings of banks and robust credit demand on the other side, we are seeing financial conditions tightening globally with U.S. yields rising for particularly for the Jackson on symposium. But I mean, as I mentioned that on the fixed income side, over the last 5 years or so, if you see the fixed income AUM as percentage of bank deposits, I think that percentage hasn't really gone up. We have seen significant growth in the industry on the equity side, but not so much on the fixed income side, maybe elevated yields will give us an opportunity to present that asset class also to a much larger set of investors than what we have currently.
The next question is from the line of [ Sarup ] from JPMorgan.
Just 2 questions. One is the scheme performance has improved. So have you seen any market share improvement on a flow basis happening towards HCM? And the second question is on the margins, you did mention that the flow margins are lower than the back book. But I was wondering that -- I mean, you've kind of reverted to your 35 basis points long cycle level. So how would you think about the degradation in margins going ahead?
So margin [indiscernible] to basis here and there, as we have been saying, I think it all depends on asset class mix. It depends on flows into certain points. I mean NFOs versus some of the older funds so on and so forth. On the scheme performance, of course, I think the -- with the improvement in our scheme performance across the board, we are seeing uptick in our market share in flows. I think both in the SiP as well as in the lump sum flows across all channels. So whether it's the MFPs, whether it's a large national distributors, banks, fintechs, I think, across all channels at the margin, we are seeing improved market share.
And we should see this reflected in your overall equity market share maybe with a quarter live, hopefully, next quarter or?
Yes, so this quarter also, the market share is flat over the last 2 quarters, more or less flat. But you have to keep in mind the large amount that was gathered through the NFOs. And in the last quarter, we did not have an NFO in active equity. We will have a business cycle fund in this quarter. But last quarter, a couple of other NFOs that collected over INR 10,000 crores, INR 100 billion, and we did not participate even adjusted for that, if you see our Market share, it's pretty visible that we are improving across the board.
The next question is from the line of Mohit Surana from CLSA.
I just have one question. In terms of your employee OpEx [indiscernible] cost, it's for the past 2 quarters, it's up 21%. So if I compare 2Q of this year versus 4Q of last year. So just wanted to know where -- where are we investing more in terms of our manpower cost or am I reading it wrongly that the 4Q base was very low to start with. Just wanted some thoughts over that.
So first of all, I mean, obviously, this is a people business. I mean that's, I would say, a key focus for me to ensure that we retain our people, we are able to attract the best possible talent in our company. I think if you look at overall numbers, I think for 6 months ended September '19, that is pre-Covid -- our employee cost was INR 1,145 million. As against that, the employee cost for 6 months ending September '22 is INR 168 million. So for the first 6 months of the current year, if we take out cost of ESOP, then the number is INR 1,406 million, which is an increase of 23%. Absolute or 7% on a CAGR basis. And as I said, that we have to invest in our people. I mean the growth in financial services, the sector has led to healthy demand, especially for high-quality talent, and it would not be prudent to let good talent go away. So we will try our best to balance between the 2.
Sure, appreciate your...
If to look at the overall sector, this is not exceptional. And we have to ensure -- I mean, we were at the cost of repeating, I think we have to ensure that we retain our quality talent.
The next question is from the line of [indiscernible] from Auriga Capital.
I just had one question. You mentioned about debt ETF partly taking share from debt teams on industry level. As I understand, for HDFC, that might not be the case. And hence, we must have lost a higher share than the industry? What are your thoughts? And how do we address this issue going forward?
Sorry, I didn't get it. You are saying, I mean ETF is ticking away. Is it like because we are not doing debt ETF, is it taking the share away? So I'll just tell you what we are doing is we have got approvals to launch various debt index funds. So we'll be doing it. So actually, these debt index funds or debt ETFs are more of target maturity plans. So it is equivalent to what in the [indiscernible] era. We used to call it as an FMP. So this is obviously open-ended index funds, but all of them have kind of predefined maturity. And because of the predefined maturity, a lot of investors are not worried when they are looking at holding till maturity, they're pretty much okay that they would more or less make up equal to the YTM or the entry levels. So we will have a number of debt index funds coming out of our stable over the next quarter or 2.
Okay. And till that period, we would be losing a higher share on a debt side than the industry? -- that understanding would be correct, right?
No. In fact, if you remove the debt index in rest of the categories, our market share is pretty decent. I think it's been -- we've been holding on to our market share. That's a category where we have not been present, but we'll be launching several products in the next few months. Actually, when if you look at our presentation that is there, if you look at our debt slide, that includes the debt index funds also. So despite that, our market share, despite increase in debt index fund, our market share on overall basis has been fairly stable. We have not lost market share with us than that.
On a Y-o-Y basis, we must have done, but not on this, right? Sequentially, we might not have done on a Y-o-Y basis, we might have lost share?
So I'll tell you on a Y-o-Y basis also, if you look at debt, AMR share was 14.6% on quarterly average. We are -- as of now, this quarter, we were in -- so it's basically just about 1%. And see there are, like, as you know, right, on the debt side, there are large corporate, large treasuries, large institutional investors. So they might kind of take some money out at various points in time. Plus, of course, we have seen some bit of interest rate, not exactly conducive to the debt funds as a whole, right? So these are a couple of reasons. The margin loss in market share on a Y-o-Y basis on a Q-on-Q, it's been flat despite the growth that we spoke of on the index side.
The next question is from the line of Dipanjan Ghosh from Citi.
Just one question from my side. Your SIP market share has obviously improved over the last 2 or 3 quarters. Just wanted to get some color on the channel of origination, how much is left [indiscernible] channels? And how do you see the customer stickiness on SIPs across these channels? Any qualitative color will be useful.
We are improving across all channels. And our focus is like ensuring that we get our fair share across all channels, which includes as said, MFDs, which account for -- if we look at like the first half of this year, MFDs will account for around 15% of the new SIPs, Nation distributors would account for around 20-odd percent. -- direct would be like 10%. Fintech actually account for almost 1/3 of the new SIPs that get created. And then you have some of the banks which have closed on Carat architecture and then the other banks. And we watch our market share across all of these segments. And our endeavor is to ensure that we are getting our fair share across all of these channels, and we are making incremental improvement across all of these channels. The number that Simal mentioned is the systematic transactions, which include both SIP as well as STP.
Just one small follow-up. You obviously mentioned the mix across some of the channels for the first half of the current fiscal. If you can give some color on either on a Y-o-Y basis, how this mix should have changed or maybe which are the counter share of which channels are the basis where you're actually gaining the market share? I mean if you can give some color on that.
I think that across all channels, so which includes MFDs, national distributors, I mean other banks, which are -- I mean other than those banks which have closed or highly guided architecture, direct small amount it comes from what we call RIA lesser investment advisers and Fintechs. So, in all of these channels, we have improvement year on year. from the base. I mean the other way to look at it, the top 10 entities account for around 60% of the industry total. And I'm talking about the new SIP count and not the amount on the account. And in all 10 of them, we have improved our market share. This is one of the -- that I mentioned in response to an earlier question, this is one of the big focus areas at our end.
The next question is from the line of [ David Shagawal ] from IIFL Securities.
Sir, my first question is I wanted to understand how big is this ETF debt ETF market? And what potential are you seeing in this?
I think it's almost not touching...
So I'll tell you liquid and debt ETF have added up to INR 68,000 crores. Of this INR 68,000 crores, one asset management company, which runs the Para bond ETF, they are themselves INR 50,000 crores, just about. So like on the debt ETF side, that is the story. That is basically dominated redone. That is basically one asset manager. On the debt index fund side, the AUM stands at around INR 57,500 crores.
Okay. And coming to the alternate, again, this time, we have lost the AUM out there. So one, what exactly which fund have we lost, which led to a sharp decline in our PMS AUM? And what was the financial impact of that?
No one large situational investor has taken money off the table. We had a large client relationship, a large global institution at close the mandate. Of course, relationship with the institution and cushion is strong, and we'll continue to engage with them. On the other side, we definitely are working through various modes to build on our international business. I mentioned earlier about our setup gift. That would be a big step in that direction, and you'll hear more from us on this front over the next few quarters.
All right, sir. But any financial number that you can give around with this mandate that we lost, what would be the impact on the revenues?
I mean if you look at our overall revenues, it's not material.
Okay. And you did mention that you will see a lot on traction the alternate products, especially with the launch of the AF 2 funds and some of the PMS funds. Any number that you are targeting to increase your AUMs in this non-mutual fund business over the next 2, 3 years?
Well it’s a little premature to, give out those numbers. All I would say is that, yes, that's one business where we have been investing. We have ambitious plan. We launched this category to fund of funds. We will be looking at other products there as well. On the PMS side, as I mentioned, we have launched a second product. So on the non-mutual fund side, both PMS and NAF are going to be the areas where we are going to focus.
All right. And lastly, sir, what would be the quantum for the ESOP expense for the full year this year? And by how much should we expect a decline in the next year?
So this year's total cost will be about INR 40 crores for the year by '23.
Right. And next year, the likely decline?
That's a function of a -- decline is NRC decide to allow more options, that's a different discussion. So we can't comment on sale.
But on the current issued ESOPs?
Yes. I mean we don't give future numbers mathematics, we can take it offline, but it's clearly the reducing balance that's how the India accounting work.
The next question is from the line of Lalit Deo from Equirus Securities.
Just wanted to understand on the HI segment, which forms a set part of our individual area. So given the volatile markets, how are the inflows shaping up over there? And like what is the outlook, what would be the outlook over there?
Yes. Lalit, I think does give us one sec. I think you were not very clear. I have been able to get you. So just give us one minute...
Yes. In fact, if I remember correctly, 75% of flows large men are purely from SIP, which means that lump sum floors have come down. So maybe some of the investors who are putting the lump sum flows are not putting now markets are very volatile. But I think we have to give it to the individual investors, retail investors in India or shown tremendous resilience against the backdrop of the heightened volatility that we have seen over the last 7, 8 months. But yes, I mean, the lump sum flows have clearly slowed down. Earlier, we gave you the number of quarter-on-quarter as year-on-year. So that slowed down a bit because of the volatility.
Sure, sir. And then on the SIP side.
Sorry Sir I think you are sounding a bit muffled. Are you on speaker phone right now?
Yes. yes. Is this better?
Yes, this is better.
Sure, sir. So like as you mentioned that on the SIP front, the new registrations, like about like 1/3 is coming through the fintech channel. So could you talk about the persistency level and like how much of -- how much of it is being retained at the retention ratio of those numbers from the fintech channel, especially?
No. My assumption is that maybe persistency is lower on that channel relative to most of the other channels. We don't give that granular detail. At our end, as I mentioned earlier, and I reiterate that our share has been going up across all channels.
The next question is a follow-up from the line of Kunal Thanvi from Banyan Tree Advisors.
So I'll just follow up on the debt festive or the index fund that we were taking in response to the earlier partisan. I wanted to understand what kind of yields are there in the that ETFs and vessels, like is it closer to the equity prices? Or is it closer to the active debt runs like what's the sense there? Like if there's structural movement from, say, some part of the active debt to perceive what is that we are looking at in terms of the yield compression on the website?
As of -- I mean we are able to launch products, but when we are looking at the industry, I think they are somewhere between 10 to 20 over product innovation on that side. But you are right, I mean, that would be lower than what the current blended yield on the overall open-ended debt schemes.
The next question is from the line of [ Alok Kumar ] from UTI AMC.
I just wanted to understand what has been the impact of the rising yields on our debt portfolio. And how do we look about the future of the yield markets and our debt AUM?
No. As I mentioned earlier that there have been outflows from the debt funds over the last several months as yields have been inching up. This is in line with the trend in past as well. Over a period of time, once sales stabilize and given the elevated yields, we are hopeful that this would attract a lot of individual investors to the debt funds. I mentioned earlier that while we have seen significant increase in individual participation in equities, particularly in the SIP side. But in the industry, we hardly talk about SIP debt funds. I mean, all of us have grown in our childhood thinking about recurring deposits and banks, something similar, I think our industry needs to do as well, promoting SIP in the fixed income funds for investors who are hard or debt or hard core fixed income investors. I think you said these levels with product innovation and some of the other efforts by the industry, both on the investor education as well as marketing can lead to a lot more penetration of debt funds among the individual investors.
There's a lot of opportunity. I'm just repeating, I think I mentioned earlier, and in case I didn't that, if you look at the overall debt AUM in India in the last 5 years, -- the industry has grown so much and the overall growth in the industry has been significant. But on the debt side as a percentage of bank deposits, if you put any other metrics, I think we haven't really grown much on that side as an industry, and I think there's a lot of opportunity.
A large part of the savings remain in fixed income instruments in India, apart from, of course, real estate and gold, where the significant proportion of household savings are. I think yielded elevated levels, some of the product innovation, which is happening in the industry and maybe some bit of other efforts from the industry can lead to a lot more penetration on the debt side. So I remain quite optimistic. But when yields go up, when people see MTM losses or the MTA or maybe the overall lower returns on their debt points, we have seen historically some bit of outflows from the existing funds, but as they stabilize as yields stabilize at higher levels, they start attracting money.
And any plans or any product where we can lock the investors fund at a higher yield, given that the returns on the FD deposits are also not -- have not yet increased as much as the lending rates have increased. So any method any way where we are looking at launching some products wherein we can lock in the funds at higher interest rates for our investors?
No, absolutely. That's what we talked about earlier. So those are like target majority clients. I think those funds where underlying investments would be in defect or SBL or highly dated corporate boards, which is specific majority. And they are similar to fixed maturity plan earlier, but fixed maturity plans used to be closed ended. These are kind of open ended in next slide.
Thank you, ladies and gentlemen. As there are no further questions, I would now like to hand the conference over to Mr. Navneet Munot, for closing comments. Over to you, sir.
Thank you so much, and wish you all a very happy, safe Diwali and a prosperous and blissful new year ahead. Last 2 years, I think the Diwali time wasn't as, I would say, Jubilant given the overall pandemic situation. Now that thanks to the vaccination and thanks to everything coming back to normalcy, I think there is a lot more joyful Diwali that everybody and every family is looking forward to. Thanks again.
Thank you, sir. Ladies and gentlemen, on behalf of HDFC Asset Management Company Limited, that concludes this conference. We thank you all for joining us, and you may now disconnect your lines.