The Rs 37.73 trillion mutual fund (MF) industry has 3.06 crore unique investors, shows data released by the Association of Mutual Funds in India (Amfi) for December 2021. This estimated number of unique investors is based on Permanent Account Number (PAN) and PAN-exempt investor (PEKRAN) data as on December 31, 2021.
Rising Popularity of SIPs
Systematic investment plans (SIPs), which allow you to invest in MFs on a regular basis, contribute about 15 per cent of the overall MF industry’s assets under management (AUM). The total number of SIP accounts as on December 31 stands at 4.91 crore. Of this total, about 4.16 crore SIPs accounts are in equity-oriented schemes. This accounts for about 85 per cent of the total number of SIP accounts. About 31.2 lacs SIP accounts are in hybrid schemes, which invest in a mix of equity and debt; followed by 12.61 lakh accounts for debt-oriented schemes (other than liquid and overnight funds).
In financial year 2022, from April 2021 till December 2021, the SIP trend has been upward. In April 2021, the SIP contribution stood at Rs 8,596 crore, growing to a historic peak of Rs 11,305.34 crore in December 2021.
The increasing trend in equity inflow is despite corrections in the equity market. Experts attribute these inflows to investors’ faith in resilient growth of the Indian economy. “SIP has been the favourite medium of consistent investing and disciplined mode of savings by the common man. This is evident from the number of accounts rising,” said N.S. Venkatesh, CEO, Amfi. He added that thanks to regular financial literacy, retail investors now understand the nuances of managing market volatility and risk adjustment through SIPs. Overall, 2021 has ended in an increase in disciplined investing, which can be seen in the number of SIP investments.
Rise of Passive Funds
According to Amfi data, assets of passively-managed funds have surged over 60 per cent to Rs 4.7 trillion in December 2021, compared to Rs 2.94 trillion in December 2020. In December 2021, the total number of folios of passive schemes stood at 14.9 million, which is more than double of the 5.7 million folios in December 2020. The number of schemes too has increased from 168 to 225 in the same periods.
The rise of passive funds could be attributed to the whopping rise in the number of demat accounts in the last two years. Last week, Ajay Tyagi, who is the chief of the capital market regulator, Securities and Exchange Board of India (Sebi), said at a National Stock Exchange (NSE) event: “In line with the global trend, India has seen a significant increase in the number of individual investors accessing the capital markets. From an average of 4 lakh new demat accounts opened every month in 2019-2020, it tripled to 20 lakh per month in 2021 and has further increased to around 29 lakh per month till November of the current financial year. That is more than seven times of the monthly average (in) the pre-Covid year of 2019-2020. In fact, the cumulative (number of) demat accounts, which stood at 3.6 crore as on March 2019, (was) 7.7 crore as at end of November 2021.” He also added that as of November 30, 2021, there were 16 exchange-traded funds (ETFs) benchmarked to the Nifty 50 index with total AUM of more than Rs 1.6 lakh crore. In addition, there are seven international ETFs based on Nifty 50 with a total AUM of more than $1 billion.
Among passively-manged funds, four index funds and six ETFs were launched in December 2021 alone. The index funds collectively managed to garner Rs 161 crore while the six ETFs collected Rs 6,409 crore. This clearly shows the rising popularity of ETFs amongst next-gen investors.