India adds 5.1 million new mutual fund investor accounts in June quarter



Asset management companies added 51 lakh investor accounts in the June quarter, bringing the total to 13.46 crore, on the back of increased awareness of mutual funds and ease of trading thanks to the digitization, and experts hope that the current exercise will also be promising.

By comparison, 93 lakh accounts (or folios in mutual fund parlance) were opened in the March quarter, while a staggering 3.2 crore investor accounts were added in the past 12 months. , according to data from the Association of Mutual Funds in India (Amfi).

Although there were fewer folios in April-June of this year than in the March quarter, there was still an increase, indicating that investors continued to invest despite market volatility.

Geopolitical tensions like the Russian-Ukrainian war, rising inflation, rising bond yields and the Federal Reserve’s hawkish views on interest rates are a few factors that can be attributed to this, Priya said. Agrawal, Money Coach at LXME.

Going forward, the current fiscal year looks promising in terms of folio growth, she said.

Market conditions, geopolitical situations, inflation rates, financialization of investments and growing awareness among people are some of the things that can impact this industry, she added.

“The majority of retail mutual fund investors invest in equity funds. Market conditions will have a role to play in increasing the number of folios and investors. Participation will increase when stock market stability will come back, which could happen in the next few years, so we believe mutual fund reach and penetration will increase this fiscal year,” said Harshad Chetanwala, co-founder of MyWealthGrowth.com.

According to the data, the number of folios with 43 fund houses rose to 13.46 crore in June 2022 from 12.95 crore in March 2022, registering a gain of 51 lakh in the three-month period.

The industry reached a milestone of 10 crore folios in May 2021.

The number of folios under equity, hybrid and solutions-based plans, in which the maximum investment comes from the retail segment, stood at around 10.72 crores in the June 2022 quarter, up from almost 4% compared to the previous period from January to March.

Folios are numbers assigned to the accounts of individual investors. An investor can have several folios.

“Individual participation is expected to continue to increase in the future as mutual fund penetration is still low relative to its true potential. As we see greater mutual fund awareness , we will see the participation of individuals increasing,” Chetanwala said.

The mutual fund space has seen steady growth in the number of folios over the past few years.

It saw an addition of 3.17 crore in investor accounts in 2021-22, 81 lakh in 2020-21, 73 lakh in investor accounts in 2019-20, 1.13 crore in 2018-19, 1, 6 crore in 2017-18, over 67 lakh in 2016-17 and 59 lakh in 2015-16.

Some of the tailwinds supporting the sector include increased mutual fund (MF) awareness, strong distribution platforms and ease of trading through digitalization, which has been further boosted by the COVID-19 pandemic.

According to LXME’s Agrawal, the multiple factors that have enabled the growth of the mutual fund industry are an increase in digitalization, availability of easy-to-consume information, increased awareness and a change in the mindset of instruments. traditional to newer ones, especially stock-based ones. funds because investors are increasingly aware of the importance of having instruments capable of fighting inflation in their portfolios.

Despite the robust growth in the number of folios over the past few years, MF penetration remains low, with less than 3% of the Indian population exposed to MF.

Of the addition of 51 lakh, 35 lakh folios were added in equity-focused schemes. Investor accounts in equity-based plans (both open and closed) reached 8.98 crore in the June quarter from 8.63 crore in the March quarter.

Investors prefer equities as they are known to be a value-creating asset class and their growing awareness among investors is driving the growth of investments in equity-oriented schemes with the aim of achieving financial goals at long term.

However, the number of debt-focused scheme folios (both open and closed) fell from 2.43 lakh to 73.65 lakh during the period under review.

In the debt category, liquid funds continued to dominate the chart in terms of number of folios at 17.5 lakh, followed by short duration funds (10.14 lakh), corporate bond funds ( 6.38 lakh), ultra short term (6.15 lakh) and overnight funds. funds (6.11 lakh).

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Dolores W. Simon