India adds over 51 lakh new mutual fund investor accounts
Due to increased knowledge and the convenience of transactions made possible by digitalisation, asset management organisations increased the number of investor accounts by 51 lakh in the June quarter, bringing the total to 13.46 crore.
Asset management companies added over 51 lakh investor accounts in the June 2022 quarter, bringing the total to more than 13.46 crore. According to data from the Association of Mutual Funds in India (AMFI), 12.95 investor accounts were added in the March 2022 quarter.
Folios are numbers assigned to the accounts of individual investors. Multiple folios are possible for investors. The mutual fund space has been witnessing a consistent growth in folio numbers in the past few years.
In order to attain long-term financial goals, investors are increasingly choosing equities because it is recognised as a value-creating asset class. This increased knowledge among investors is fueling the development in investments in equity-oriented schemes.
3.17 crore new investor accounts were added in 2021–2022, 81 lakh in 2020–2021, 73 lakh in 2019–2020, 1.13 crore in 2018–19, 1.6 crore in 2017–18, more than 67 lakh in 2016–17, and 59 lakh in 2015–16.
The industry is benefiting from factors like rising mutual fund (MF) knowledge, robust distribution channels, and simplified transaction processes thanks to digitization, which was further accelerated by the COVID-19 epidemic.
This can be attributable to a number of variables, including growing inflation, rising bond yields, and the Federal Reserve's hawkish views on interest rates, according to Priya Agrawal, a money coach at LXME.
Despite the fact that there were fewer folios in April–June of this year than there were in the March quarter, there was nevertheless an increase, showing that investors kept investing despite the market's turbulence.
According to her, the current fiscal year appears to be looking up in terms of folio growth. A few factors that could affect this industry include market conditions, geopolitical circumstances, inflation rates, financialization of assets, and rising public awareness, she continued.
"Majority of mutual fund retail investors invest in equity funds. The market conditions will have a role to play in increasing the number of folios and investors. The participation will increase when more stability returns in the stock market, which may happen in the coming few quarters. Hence, we believe the reach and penetration of mutual funds will increase this financial year," Harshad Chetanwala, Co-founder of MyWealthGrowth.com, said.
The data shows that 43 fund companies had 13.46 crore folios in June 2022 compared to 12.95 crore in March 2022, an increase of 51 lakh over the previous three months.
In May 2021, the industry reached the landmark of 10 crore folios. As of the June quarter of 2022, there were over 10.72 crore folios under equity, hybrid, and solution-oriented schemes, where the majority of investment comes from the retail sector, an increase of almost 4% from the prior January-March quarter.
"The retail participation should continue to increase in future as mutual fund penetration is still low when compared to its actual potential. As we will see more awareness about mutual funds we will see retail participation increasing," Chetanwala said.
According to LXME's Agrawal, multiple factors that have enabled the growth in the mutual fund sector are an increase in digitisation, availability of easy-to-consume information, increased awareness, and a mindset shift from traditional instruments to the newer ones especially equity-based funds as the investors are becoming more conscious of how important it is to have instruments in their portfolios that can combat inflation.
Although the number of folios has increased significantly over the past few years, less than 3% of Indians are exposed to mutual funds.
35 lakh additional folios were added in equity-oriented schemes out of the 51 lakh addition. From 8.63 crore in the March quarter to 8.98 crore in the June quarter, investor accounts in equity-oriented (open and closed ended) schemes increased.
The number of folios for debt-oriented schemes (both open and closed ended) decreased by 2.43 lakh to 73.65 lakh over the time period under consideration.
Liquid funds, which continue to have the most folios in the debt category, are followed in order of number of folios by low duration funds, corporate bond funds, ultra short duration funds, overnight funds, and low duration funds, respectively (6.11 lakh).
(With agency inputs)
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First Published:10 Jul 2022, 04:27 PM IST
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