Despite volatile equity and debt markets, the individual investor has stood like a rock behind the Indian mutual fund industry. Unlike institutional investors who squeal and jump ship at the first sign of trouble, individual investors have been much more patient and mature in their approach. As a result, individual investors continue to hold a higher share of industry assets, i.e. 53.3% in October 2018, compared to 49% in October 2017. Here are some fascinating insights about individual investors.
The growing clout of the individual investor is great news for the MF industry for many reasons. Individuals tend to stick with their investments for a longer time. Also, institutions lead to great variations in industry assets since they move in and move out at the drop of the hat. With individuals now holding over 53% of MF industry assets, it is time that fund-houses recognised the power of individuals in groups.
As per AMFI data, institutional investors account for 46.7% of the assets, of which corporates are 92%. The rest are Indian and foreign institutions and banks. As you can see from the graph below, the major switch happened in December 2017 — this is when individuals started accounting for more share of the assets than institutions.
Prefer equity, while debt is rising
Individual investors love equity schemes. A look at the investor categories across scheme types clearly shows the same. As much as 87% of equity scheme assets (including balanced funds) belong to individuals. The individuals can be divided into two groups – retail and HNIs. HNIs are investors who invest with a ticket size of Rs 5 lakh or above.
Institutional investors dominate liquid and money market schemes (87%), debt oriented schemes (55%) and ETFs, FOFs (93%). In pure debt oriented schemes too, individuals with 45% of assets are now giving tough competition to institutions.
Here is a break up of individual and institution assets across 4 types of MF categories.
As explained above, individual investors primarily hold equity-oriented schemes while institutions hold liquid and debt oriented schemes. The good run in equity and sustained inflows through SIP route (Rs 7,900 crore came in October 2018 alone) may be why individual assets are growing at a fast clip.
The value of assets held by individual investors in mutual funds increased from Rs 10.67 lakh crore in October 2017 to Rs 12.35 lakh crore in October 2018, an absolute increase of 15.71%. On the other hand, the value of institutional assets decreased from Rs 11.11 lakh crore to Rs 10.80 lakh crore, a decline of 2.87%. Look at the following slide to understand the full picture.