Over half of the retail equity AUM remained invested for more than two years in FY 2016-17, shows the latest AMFI data. Of the Rs.3.19 lakh crore retail equity assets as on March 2017, 52% or Rs.1.65 lakh crore has been carried forward since FY 2014-15, i.e, more than 24 months. While as on March 2016, 53% of retail money had been carried forward for more than two years and stood at Rs.1.16 lakh crore.
Traditionally, retail investments have stayed put for long term. It is considered to be sticky assets unlike institutions who book profits at regular intervals. This is a good sign for the industry as retail investors stay put despite recent market rally.
Experts attribute the increase in AUM to the maturity of investors, mark to market gains and higher inflows through SIP from individual investors.
“Investors have matured and they do not redeem their investments when the market takes an upswing. Also, no asset class other than equity is giving high returns to investors. Hence, many investors have remained invested in equity due to the attractive past performance,” says Suresh Sadagopan of Ladder7 Financial Advisories.
Amol Joshi of PlanRupee Investment Services says, “A major chunk of retail investors invest in equity mutual funds through SIP. Most of them make goal-based investments and hence, remain invested for the long-term.”
FIIs recorded the highest AUM to remained invested for more than two years in percentage terms. AMFI data shows that 74% of FII’s AUM or Rs.2,764 crore remained invested for more than two years.
Experts say that the holdings of FII depend on the economic outlook of the country and the limit to which they can invest. “Most FIIs are long-only pension funds. Hence, once they take a view of the country’s prospects, they stay invested for years,” says Amol.
AUM of domestic institutional investors (DIIs) like banks from a two-year perspective was the least. AMFI data shows that DII’s AUM in equity funds declined to Rs.145 crore in March 2017 from Rs.1,795 at regular intervals to book profits,” says D.P Singh, CMO, SBI Mutual Fund.
