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Photo: iStock

Average investor holds 9 mutual funds in portfolio: Kuvera report

  • According to experts a high number of schemes drags down the portfolio’s ability to generate excess returns compared to the overall market. Mutual Fund holdings also often overlap with one another, leading to needless replication of similar portfolios in different schemes.

A report released by direct mutual fund platform Kuvera on Thursday showed that the average mutual fund investor on the platform holds as many as 9 schemes in his or her portfolio. Also, the longer a person has been an investor, greater is the number of mutual fund schemes held in the portfolio, the report added.

Investors who started investing in 2002 have 18 schemes on average, while those who entered in 2010 have 12 schemes and those who entered in 2018 have 6 schemes. Kuvera was launched in 2017 but allows investors to upload older portfolios. It currently has assets under management of around 18,000 crore.

According to experts a high number of schemes drags down the portfolio’s ability to generate excess returns compared to the overall market (alpha). Mutual Fund holdings also often overlap with one another, leading to needless replication of similar portfolios in different schemes.

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“I think more than average what it shows is that people add schemes as portfolio ages. So someone who is investing for 5 years has north of 10-11 schemes. People chase best performing funds but seldom think about how they fit to their already existing portfolio," said Gaurav Rastogi, CEO, Kuvera. “We also hear the naive diversification argument a lot - if you have a large allocation then invest in 3-4 diff large cap funds rather than 1. This basically ensures you won’t have any alpha over index. It brings you down to average category returns which in some cases are sub index," he added

The report also listed the most bought and most sold schemes on the platform in 2020. The most purchased schemes were Parag Parikh Long Term Equity, Axis Bluechip, UTI Nifty Index Fund, Mirae Asset Emerging Bluechip and Axis Midcap Fund respectively. The most sold schemes were L&T Emerging Bluechip, Aditya Birla Sun Life Frontline Equity, HDFC Hybrid Equity, HDFC Small Cap and Franklin India Smaller Companies Fund. The average investor on the platform is also highly skewed towards equity, with a 77:23 split between equity and debt

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