BackMFs still not the preferred way of corpus building
As income level rises so does mutual fund ownership
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Mutual funds, considered the safest way to enter the equity market and build a corpus over the long term, still have a long way ahead to become a popular household name in urban India. The eighth and the penultimate instalment of the Indian Financial Scape survey, conducted by Delhi-based economics research firm Indicus Analytics, which tracks patterns of financial asset ownership of urban India, shows that on average only 7.20% of urban households own mutual funds. The data is split across income groups and regional variations. At least 35,000 households were surveyed across urban India over April-June 2012. The ownership pattern is very similar to what we saw for stocks—as income level rises so does mutual fund ownership. In the lowest income categories up to ₹ 5 lakh, the average ownership is just above 1% and in the annual income categories between ₹ 5 lakh and ₹ 50 lakh the average ownership is 6.50%. However, the highest income categories between ₹ 50 lakh and above 1 crore, the average ownership shoots up to 20.54%. Not surprisingly again, the western region of the country is most fund-savvy and leads peers across all income categories both in absolute and percentage terms.
Key takeaways:
1. The western region is ahead of rest of the country in mutual fund ownership.
2. The overall pan-India ownership of mutual funds stands at a mere 7.20%.
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