Retail investors rule the roost in MFs new year party

Retail investors have played a major role in the mutual fund industry’s record breaking spree both in terms of attracting investment and mopping highest ever asset.

The retail asset under management (equity, hybrid and solution oriented schemes) has jumped whopping 33 per cent in last 11 months of this year to ₹27.01 lakh crore against ₹ 20.35 lakh crore logged in January.

In fact, retail asset account for 55 per cent of the overall mutual fund industry’s AUM of ₹49.04 lakh crore in November, as per the Association of Mutual Funds in India data.

Retail folios have increased 13 per cent to an all-time high at 12.92 crore in November against 11.43 crore in January.

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The industry has achieved a record 4 crore unique investors in September against about 2 crore logged in March, 2020.

Retail participation rise

The major highlight of retail participation 23 per cent increase through monthly systematic investment plan to ₹17,073 crore last month against ₹13,856 crore in January.

In fact, SIP inflows had risen 22 per cent in last 11 months to ₹1.66 lakh crore against ₹1.36 lakh crore logged in same period last year. The number of SIP accounts have gone up 21 per cent to 7.44 crore against 6.22 crore in January.

G Pradeepkumar, CEO, Union Asset Management Company said retail participation is steadily rising, with monthly SIP flows surpassing ₹17,000 crore and this trend is expected to continue as investors recognise the potential for wealth creation through mutual fund investment.

While elections are one of the important factors that could decide the future of the market, the market players are currently building political stability and continuity in government, which augers well from a market and industry point of view, he said.

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Parth Parekh, Head Investor Relations, Prudent Corporate Advisory Services said the ability of mutual funds to deliver inflation beating returns is well understood by retail investors and it will eat into the share of bank deposits.

There are just 4 crore unique mutual fund investors in the country and this number is set to grow 10 times in 25 years, he added.

The Multi-cap Fund — a well-diversified category which invests 25 per cent each in large, mid and small-cap stocks and remaining 25 per cent as per fund manager’s discretion — has delivered 18 per cent CAGR over seven years which implies investor have gained 200 per cent in seven years. A Fixed Deposit at 6 per cent CAGR would have given 50 per cent gains in same time frame, said Parekh.

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