Increasing
awareness about mutual funds, ease of transactions through digitisation and
sharp surge in equity markets have aided asset management companies to add a
staggering 3.17 crore investor accounts in 2021-22, with experts saying the
trend is likely to continue this fiscal as well.
This was a significant rise from
2020-21 when 81 lakh accounts (or folios in mutual fund parlance) were opened,
data with the Association of Mutual Funds in India (Amfi) showed.
The ongoing financial year too appears to be promising in terms of
folios as increase in investor accounts will enable people to move beyond fixed
deposits and savings accounts, said Priti Rathi Gupta, founder of LXME, a
financial platform for women.
Market conditions, geopolitical
situations, inflation rates, financialisation of investments and increasing
awareness among the people are some of the elements that may have an impact on
this industry, she added.
If the retail investors get spooked by the market turbulence
driven by change in interest rates, then folios are expected to decline, said
Swapnil Bhaskar, Head of Strategy, Niyo -- a millennial-focused neo-banking
fintech.
According to the data, the number of folios with 43 fund houses
rose to 12.95 crore in March 2022 from 9.78 crore in March 2021, registering a
gain of 3.17 crore during the one-year period.
The
industry crossed a milestone of 10 crore folios in May 2021.
The number
of folios under equity, hybrid and solution oriented schemes, wherein the
maximum investment is from retail segment, stood at about 10.34 crore as of
March 2022.
Folios are
numbers designated to individual investor accounts. An investor can have
multiple folios.
The mutual
fund space has been witnessing consistent growth in folio numbers in the past
few years.
It saw an
addition of 73 lakh 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
tailwinds that are supporting the industry include increasing mutual fund (MF)
awareness, strong distribution platforms and ease of transactions through
digitisation, which was further driven by the COVID-19 pandemic.
According
to LXME's Gupta, multiple factors have enabled the growth in MF folios, like an
increase in digitisation, availability of easy-to-consume information,
increased awareness, and a mindset shift from traditional instruments to mutual
funds as the investors are expecting good returns based on past market
outperformance despite the ongoing pandemic.
"Amfi's
ongoing 'Mutual Fund Sahi hai' campaign and other investor awareness
initiatives undertaken by Asset Management Companies (AMCs) have been
instrumental in connecting the industry with wider masses to emphasise on the
importance of investing in MFs," said Saugata Chatterjee, chief business
officer, Nippon India Mutual Fund.
Also, with
AMCs deepening their branch network, and increase in distribution touchpoints
across length and breadth of the country, the industry has been able to bring
in new investors, he noted.
Jimmy
Patel, MD and CEO, Quantum AMC, said as interest rates have been moderating,
investors are looking at options beyond traditional avenues. Further, increased
awareness about mutual funds has helped in boosting participation by retail
investors.
He further
said volatility in the market and chaos across the globe have not prevented
Indian investors from pouring funds into the market through the mutual fund
route. This shows the investors' trust and confidence in the Indian growth
story.
Of the 3.16
crore addition, 1.95 crore folios were added in equity-oriented schemes.
Investors' accounts in equity-oriented schemes (open and close ended) rose to
8.63 crore in March 2022 from 6.68 crore in March 2021.
While
returns from other asset classes have not been that impressive, equity, with
its noteworthy performance, turned out to be the obvious choice for investors,
said Himanshu Srivastava, associate director – manager research, Morningstar
India.
Since
mutual funds are the most convenient and the best way to invest in equities,
more and more investors are investing in it, he pointed out.
Given a low
interest rate environment, equity markets have seen strong participation from
retail investors who were looking for higher returns.
As a
result, the mutual fund industry has seen a surge in equity folio count, Nippon
India Mutual Fund's Chatterjee said.
Additionally,
many MF investors are diversifying their portfolios to get exposure to other
index and international funds, which in turn is also supporting the folio count
growth, he added.
Despite the
robust growth in folio count over the past few years, MF penetration remains
low, with less than 3 per cent of India's population having MF exposure.
Besides,
debt-oriented schemes' (open and close ended) folios count rose by 12.31 lakh
to 88.4 lakh during the period under review.
Within the
debt category, liquid funds continued to top the chart in terms of number of
folios at 22.29 lakh, followed by low duration funds (12.26 lakh), ultra short
duration funds (7.99 lakh), corporate bond (7.13 lakh) and short duration funds
(6.98 lakh).
In terms of top asset management companies, Nippon India MF has seen the maximum growth in investor folios in FY22. Its investor folios rose by 70.22 lakh to 1.7 crore as of March 2022.
This was
followed by Axis MF, which saw an addition of 47.81 lakh investor accounts to
1.28 crore, while folios of ICICI Prudential MF grew by 33.29 lakh to 1.47
crore.
The average
assets under management of the industry sharply rose to Rs 37.7 lakh crore as
on March 31, 2022 from Rs 32.17 lakh crore in March 2021.