Young investors throng MFs

Shobha Roy Kolkata January 4 | Updated on January 08, 2018


Millennials’ share in mutual fund investments soars to 40-50%

Mutual funds seem to be catching the fancy of the millennials.

According to industry experts, investors in the age bracket of 25-35 years, commonly referred to as the millennials, accounted for 40-50 per cent of the total investments flowing into mutual funds in 2017.

Last year, total inflows into mutual funds were close to ₹2.78 lakh crore, of which nearly ₹1.78 lakh crore came from equity mutual funds.

According to Anil Kumar Chopra, Group Director, Bajaj Capital, of the total investments, inflows through SIPs was close to ₹60,000 crore last year.

“Nearly 95-98 per cent of these SIPs are in equity mutual funds. Many young people who have just started their career are flocking to mutual funds in a big way to fulfil their financial goals,” he told BusinessLine.

Growth in SIPs

The total number of SIP accounts as on date stand at close to 1.8 crore, according to the AMFI Association of Mutual Funds in India data. Of this, nearly, 72.4 lakh SIP accounts (9.05 lakh SIP accounts on an average each month) were added during the eight-month period between April-November 2017. The average investment per SIP account, per month, was close to ₹3,250, the data said.

For SBI Mutual Fund, close to 34 per cent of its new investors last year came from the millennials.

“These are typically uninitiated investors who are coming in for the first time and this trend is picking up,” RS Srinivas Jain, Executive Director & Chief Marketing Officer, SBI MF, said.

According to Radhika Gupta, CEO, Edelweiss Asset Management, the 25-35 years age group seems to understand the importance of starting early. And, increasing disposable income and access to information have only helped them look at mutual funds for meeting their financial goals.

“Their risk appetite is higher. And, they are aware of the mistakes made by previous investors. Their retirement ages are coming down to mid-40s and investment goals are aligned towards building that retirement corpus,” she said.

A rapid growth in SIP culture over the last two to three years can be attributed to increasing preference for financial assets over physical assets, Raghav Iyengar — EVP & Head — Retail and Institutional Sales, ICICI Prudential AMC, said.

The campaign “Mutual Fund Sahi Hai” conducted by AMFI, besides various investor education camps held by AMCs along with the media and distributors, have helped improve awareness among the people.

Long-term investments

The average ticket size of SIPs has grown from ₹1,000-1,500 a few years ago to close to ₹3,200 now. Investments also tend to go up with every increase in pay cheque.

“Young investors are smart, tech savvy and have up-to-date knowledge. They hold investments in bank deposits, post office savings, gold and real estate as things of the past,” said Rajesh Patwardhan, CMO, LIC Mutual Fund.

According to Tata Asset Management, investors have started investing for the long term rather than being discouraged by short-term market volatility.

Published on January 04, 2018

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