There is no denying the fact that the individual investors' fascination for mutual funds seems to defy gravity as it moves in just one direction i.e., upward. The Industry Trends for June 2023 testifies this phenomenon in a granular way.
Although there are numerous observations one can draw from the trends highlighted by this report, one of the key inferences relates to a widening trust in mutual funds by individual investors, manifested in the increase in asset size by 26 percent in just one year.
Sample this: Assets held by individual investors in mutual funds rose from ₹20.38 lakh crore in June 2022 to ₹25.67 lakh crore in June 2023, an increase of 25.98 percent.
The value of institutional assets also rose by 15.33 percent from ₹16.61 lakh crore in June 2022 to ₹19.15 lakh crore in June 2023.
Individual investors mainly own equity-oriented schemes while institutional investors hold liquid, debt-oriented schemes and exchange traded funds (ETFs) and fund of funds (FoFs).
The latest data released by the Association of Mutual Funds in India (AMFI) shows that 80 percent of individual investor assets are held in equity-oriented schemes. The remainder of their assets are held in debt (14%), liquid/ money market (4%) and ETFs and FOFs (2%).
At the same time, 60 percent of institutions are held in liquid/money market schemes and debt-oriented schemes.
The remainder of institutions’ assets are held in the form of ETFs/FOFs (27%) and equity-oriented schemes (13%).
Inclination for equity
The Trends data has thrown up another interesting facet of the mutual fund industry. Equity-oriented schemes derive 89 percent of their assets from individual investors (retail and high net worth individuals).
Institutional investors, on the other hand, dominate liquid and money market schemes with 88%, and ETFs/FOFs with 89 percent of their assets drawing their funds from these investors.
It is worth mentioning here that a year ago, in June 2022, equity-oriented schemes derived 88 percent of their assets from individual investors.
And institutional investors dominated liquid and money market schemes (88%) and ETFs/FOFs (90%).