Balanced funds seem to be the flavour of the season, but how much of AUM of this category is in retail hands?
The retail participation in the balanced funds was 34% in September 2017, shows AMFI data. The retail AUM of the balanced funds stood at Rs.46,433 crore while the total AUM in the category stood at Rs.1.35 lakh crore in September 2017.
If we compare the growth of retail AUM in balanced funds, we see that the AUM has increased by 124% or by Rs.25,688 crore in the last one year. However, the share of retail balanced fund AUM to the overall balanced fund AUM has decreased over the same time period. In the corresponding month last year, retail balanced fund AUM constituted 37% of the total balanced fund AUM.
This decrease may be attributed to the rising participation of HNIs in this category. The AUM from the HNIs stood at Rs.70,851 crore, which increased by Rs.44,240 crore in the last year. This led to an increase in the share of HNIs in this category from 47% to 52% in September 2017.
Nisreen Mamaji of MoneyWorks Financial Advisors says that HNIs invest in balanced funds as they are less volatile than direct investments in stocks. “HNIs mostly invest in balanced funds as they carry less risk compared to direct stocks or PMS. They invest in balanced funds in the hope of securing regular dividends,” says Nisreen.
Geographically, 58% of the assets i.e. Rs.12,485 crore came from the top 15 cities. The AUM in the balanced funds from the T15 cities increased by Rs.14,388 crore while the assets in the B15 cities increased by Rs.11,300 crore in one year. The figure also shows a healthy trend as the percentage of the B15 retail AUM has increased to 42% from 40% last year.
Bhilai-based Zian Khan of Omega Financials says that fall in the interest rate is the main reason behind the increase in AUM of balanced funds among investors in small cities. “Most of my clients tell me that they want to shift their investments from fixed deposits to balanced funds due to the falling interest rates. Investors are also attracted to balanced funds due to their tax efficiency and the past performance of these funds,” says Zian.
