With increasing digital access and growing awareness about mutual funds, asset management companies (AMCs) have added nearly 70 lakh investor accounts in the first five months of the current fiscal, with a total of 13.65 million.
This came after the addition of 3.17 million investor accounts in 2021-22 and 81 lakh accounts (or folios in mutual fund parlance) in 2020-21, data from the Association of Mutual Funds in India (Amfi).
The sharp increase in the number of mutual fund (MF) portfolios means that many new investors are entering the capital markets and adopting mutual funds as their preferred vehicle for investing.
“Demonetization led to financialization of household savings, further fueled by the lockdown caused by the pandemic, generational change in risk appetite and savings pattern, systematic investment plans becoming lifestyle and a long-term structurally bullish market are the main reasons for an increasing number of investors investing in mutual funds,” said Akhil Chaturvedi, Chief Commercial Officer, Motilal Oswal Asset Management.
Priti Rathi Gupta, founder and MD, LXME, attributed the increase in the number of sheets to a number of factors, including increased awareness among people driven by literacy programmes, advertising campaigns, easy-to-consume information, increased digitalisation and women’s participation.
Also, a shift in mindset from traditional investment vehicles to mutual funds helped grow investor accounts.
According to the data, the number of folios with 43 fund houses rose to an all-time high of 13.65 million in August 2022 from 12.95 million in March 2022, registering a gain of Rs 70 lakh during the period .
The industry passed the milestone of 10 million folios in May 2021.
Post-Covid, Indian stock markets have risen sharply, thus attracting investor interest. Also, during the recent testing times, Indian markets have shown better resilience than most other global markets, and this has not gone unnoticed, said Himanshu Srivastava, associate director of managing research at Morningstar India.
Industry experts believe that the total of 13.65 million folios has a long way to go.
In terms of the investor-type composition of mutual fund assets, the share of retail investor industry assets has increased from 55.2% in March to 56.6% in August. This suggests that people are working to better channel their savings.
The number of sheets in equity, hybrid and solution-oriented schemes, where the maximum investment is from the retail segment, stood at around 10.85 million as of August 2022.
“We are in the midst of a structural trend with rising equity ownership among retail investors. With higher levels of education and supportive regulations, households have become more risk-aware,” added Chaturvedi .
Folios are designated numbers for individual investor accounts. An investor can have several sheets.
The mutual fund space has witnessed a steady growth in the number of sheets in recent years.
73 million investor accounts were added in 2019-20, 1.13 million in 2018-19, 1.6 million in 2017-18, over 67 lakh in 2016-17 and 59 lakh in 2015-16.
Over the years, investors in India have become more cautious with their investments. They have gradually started holding their investments during tough market conditions instead of panicking and exiting, while also increasing their investments when markets are down, Srivastava said.
Trust Mutual Fund CEO Sandeep Bagla said the outperformance of equities has been the main reason for opening new investor portfolios. Also, because interest rates are low, a lot of retail money moved from fixed income to stocks.
The number of sheets will continue to rise as long as the market trend is up, as mutual fund penetration is still low in India compared to other markets, he noted.
Within the debt category, liquid funds continued to top the chart in terms of number of leaves at 17.53 lakh, followed by short duration funds (9.95 lakh), corporate bonds (6.3 lakh) , ultra short duration funds (6.21 lakh) and overnight funds. fund (6.09 lakh).
Chaturvedi of Motilal Oswal Asset Management believes that mutual funds are finding early acceptance from traditional investors in relation to direct exposure to stocks.
Also, over time, many demat account holders would switch to mutual funds if not after their initial enthusiasm for trading has worn off, he added.
According to industry data, the top states contributing to the industry’s Rs 39.5 lakh crore assets under management (AUM) are: Maharashtra, New Delhi, Gujrat and Karnataka. In addition, there is a strong attraction of investors from smaller cities investing in mutual funds