Over 81 lakh investors’ accounts have been added in the mutual funds industry. The addition was noted in the first two months of the current fiscal (FY25), and are mainly due to consistent marketing efforts, celebrity endorsements and dedicated work of the distribution network.
Trivesh D, COO of stock trading platform Tradejini, told PTI that changing perceptions about fixed deposits, which no longer offer competitive returns compared to mutual funds, and the rise in income levels and accessibility to financial markets have also contributed to the rise in new investors.
He said that the outlook for mutual fund folios remained strong. This was supported by the ongoing bull run in the stock market, solid risk management practices, continuous investor education, and consistent marketing efforts, he added.
According to experts, the mutual funds industry will continue to foresee decent growth as savers are increasingly looking for alternative avenues to create wealth for their long-term goals.
“As India’s per capita income grows, investors will look to save money in asset classes, which have the potential to beat inflation and create wealth. As the penetration of mutual funds increases, this will translate into a higher folio base at the industry level,” Abhishek Tiwari, CBO, PGIM India Mutual Fund, told PTI.
Latest data with the Association of Mutual Funds in India (AMFI) revealed that mutual fund folios of the industry stood at 18.6 crore in May-end. A surge of 4.6 percent from 17.78 crore was registered at the end of March.
The data suggested an addition of over 81 lakh folios.
In May, the industry witnessed an addition of 45 lakh folios compared to 36.11 lakh folios added in April. Last year, the average monthly addition of folios was 22.3 lakh. This latest figure was more than double this average.
Folios are numbers designated to individual investor accounts. An investor can have multiple folios.
Interestingly, the majority of the new investors are taking the route of digital channels to enter into the mutual fund space. Overall, the total number of unique PAN and PAN-exempt KYC reference numbers stood at 4.59 crore as of May 2024.
Of the total 81 lakh folios, equity-oriented mutual fund schemes experienced an addition of 61.25 lakh units during the period under review. This has taken the number of such folios to a new high of 12.89 crore, representing 69 per cent of the total.
Investors flocked to equity funds due to the rally seen in the last few years.
Within the open-ended equity funds category, the highest increase in folios was witnessed in the sectoral/thematic funds category. This category added 23.19 lakh folios in the first two months of this fiscal.
This was followed by the small and mid-cap categories, which saw a folio addition of 8.04 lakh and 7.74 lakh, respectively.
Hybrid funds also added 3.31 lakh folios in the period under review, taking the total count to 1.35 crore. Within the Hybrid Funds category, Multi Asset Funds saw the highest increase of 1.75 lakh folios during the same period.
On the other hand, folios in debt schemes dropped by 72,940 to a total of 70.92 lakh.
Household savings have been on a decline since the Covid pandemic, dropping from Rs 23.29 lakh crore in 2020-21 to Rs 14.16 lakh crore in 2022-23, as people took on more loans for housing, business, and other personal liabilities. Despite this decrease in savings, the mutual fund industry has seen a significant increase in assets, reaching Rs 59 lakh crore.
