Almost half the retail investors stay put for the long term in mutual funds. Of the total Rs.4.48 lakh crore retail equity assets, Rs.2.06 crore of retail equity AUM remains invested for more than two years as on December 2017, shows the age-wise and folio-wise disclosure published by AMFI.
We have considered pure equity funds and ELSS for calculating retail equity AUM.
Though the proportion of retail equity AUM that remains invested for over 2 years has declined from 53% to 46%, it has grown by almost 50% in absolute terms due to increase in the overall AUM. Last year, retail equity AUM of Rs.1.41 lakh crore stayed put for over two years, indicating a 46% rise in such assets.
Retail equity is considered sticky as retail investors stay put for a longer period.
Experts attribute this absolute increase in AUM to market gains and higher inflows through SIPs from retail investors.
Agra-based Shifali Satsangee, of Funds Ve'daa, believes that investors have started linking their financial goals with their mutual fund investments. “Many investors have understood the power of SIPs and benefits of rupee cost averaging. Thanks to distributors, these investors have realised the importance of linking their financial goals with mutual fund investments,” says Shifali.
Mumbai-based Vinod Jain, of Jain Investments, feels that the upward trend in the equity markets has encouraged retail investors to stay invested. “In the last few years, equity markets have given phenomenal returns. This has led to investor confidence and hence they are staying invested for the long term,” says Vinod.
The data shows that the percentage of retail investors that remained invested between 12 to 24 months has increased in the past one year. AMFI data shows that Rs.79,254 crore of the retail equity assets remained invested between 12 to 24 months. This indicates a 57% rise in assets from December 2016.
The percentage of retail investors that remained invested for less than a year has increased in the past one year. AMFI data shows that 36% or Rs.1.63 lakh crore of the retail equity assets remained invested for less than one year. In December 2016, 28% or Rs.75,828 crore remain invested for less than a year.