Mutual fund investor base doubles in four years
Investor base of mutual funds doubling to 2.39 crore as of 30 June 2021 from 1.19 crore at the end of March 2017
The ongoing bull run in the markets and with interest rates at all-time lows is forcing investors to look for alternate avenues of investments. This saw the investor base of mutual funds doubling to 2.39 crore as of 30 June 2021 from 1.19 crore at the end of March 2017. The number of investors in the mutual fund industry is counted by unique PANs (Permanent Account Numbers) and includes both individuals & corporates.
According to data shared by NS Venkatesh, CEO of Association of Mutual Funds in India (Amfi) in the monthly conference call, the growth in unique PAN numbers was particularly steep in the first quarter of FY22. The mutual fund industry added over11 lakh unique PAN numbers in the quarter, going from 2.28 crore to 2.39 crore. This compared to 20 lakh investors added in the previous financial year when the count grew from 2.08 crore to 2.28 crore.
In an interview with Money9 Himanshu Srivastava, Associate Director – Manager Research at Morningstar India explained that “the primary reason for this growth of investor participation in the mutual fund is the success of ‘Mutual Fund – Sahi Hai’ campaign that was launched in 2017 with an intention to imparting a lot of knowledge towards mutual funds. Even the media coverage on mutual funds as a product has expanded highlighting the importance of having mutual funds in a portfolio. This has actually expanded investor base not only from metro or tier I cities but even in tier II & III cities.”
Srivastava also stated that this is just the beginning of the mutual fund industry and the current investor base is just the tip of the iceberg.
According to him, the performance of equity markets in the past year would have also attracted investors. “The huge returns made by people who stayed invested after the dip in the first wave of the pandemic would have increased confidence of people in mutual funds,” he added.
SIP it
At the same time, more and more investors are opting for SIPs with contributions rising to Rs 9,155 crore. Also, in June SIP accounts rose to 4.02 crore and AUM stood at Rs 4.84 lakh crore – all record highs. This indicates that investors are maturing. They are realising that timing the market is not possible and want to capitalise on the law of averaging that SIP offers.
“The volatility in the markets over the last few years has enhanced the appeal of SIPs. Increasingly, investors have started to comprehend the fact that it’s not possible to time the market; and in the process of doing so, they end up missing out on investment opportunities. SIPs on the other hand keep them safe from the risk of timing the markets and helps them to better capitalise on the investment opportunities during turbulent times,” added Srivastava of Morningstar India.