New Delhi: The mutual fund industry in India has witnessed growth in the first two months of the current fiscal year (FY25), adding over 81 lakh investor accounts due to continuous marketing efforts, celebrity endorsements, and the diligent work of the distribution network.
As per reports, Trivesh D, COO of stock trading platform Tradejini, highlighted that shifting perceptions about fixed deposits, which no longer offer competitive returns compared to mutual funds, along with rising income levels and better access to financial markets, have significantly contributed to this increase.
According to the latest data from the Association of Mutual Funds in India (AMFI), the mutual fund folios stood at 18.6 crore by the end of May, marking a 4.6 percent increase from the 17.78 crore registered at the end of March. This indicates an addition of over 81 lakh folios.
Notably, In May alone, the industry saw an addition of 45 lakh folios, compared to 36.11 lakh added in April. Notably, the average monthly addition of folios in 2023 was 22.3 lakh, making the recent figures more than double this average. Experts attribute this impressive growth to consistent marketing efforts, celebrity endorsements, the dedicated work of the distribution network, robust equity returns, and the ease of investing.
Additionally, a significant portion of new investors are utilising digital channels to enter the mutual fund space, with the surge led by Gen-Y and Gen-Z investors. Millennials (born between 1981 and 1996) and Generation Z (born between 1997 and 2012) are particularly active in this sector.
Overall, the number of unique PAN and PAN-exempt KYC reference numbers stood at 4.59 crore as of May 2024. "Investors tend to hold multiple folios, and thus we should look at increasing the total number of unique investors in the industry. We believe the growth will come from increasing the number of distributors and advisors in rural areas, greater adoption of technology and smartphones, and an overall increase in awareness about mutual funds," Tiwari added.
Of the total 81 lakh new folios, equity-oriented mutual fund schemes accounted for 61.25 lakh units, bringing the total number of such folios to a new high of 12.89 crore, or 69% of the total. This influx is primarily driven by the rally in equity markets over the past few years.
Despite a decline in household savings 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 personal liabilities, the mutual fund industry has seen a significant increase in assets, reaching Rs 59 lakh crore.
ALSO READ: Compensation announced for Kanchanjunga Express accident victims by PM
FIRST Business Portal addressing the potential of business capability of North East Region.
