HNIs are outpacing retail which is evident by the growth in their folios and assets.
The latest AMFI data shows that the total HNI folios across all categories grew 25% from 15.20 lakh in June 2015 to 19.03 lakh in June 2016 while retail folios grew 14% during the same period.
Balanced
HNI assets in balanced funds increased by 50% from Rs. 14,466 crore in June 2015 to Rs. 21,639 crore in June 2016. This was reflected in the growth in folios too. HNI folios in the balanced funds category jumped 72% from 83,961 to 1.44 lakh during the same period.
While HNI folios in balanced funds jumped 72% retail folios grew at a much slower pace at 23%. Similarly, HNI assets in balanced funds increased by 50% while retail assets grew 44%.
This is has emerged as one of the fastest growing categories which is expected to surpass ELSS and mid cap category. The changes in tax structure of debt funds coupled with lower risk as compared to equity funds has nudged people towards this category, say experts.
“The definition of long term in debt funds has increased from 12 months to 36 months. So advisers are recommending HNIs to invest in balanced funds for a three-year horizon,” says Nisreen Mamaji, a Mumbai based adviser.
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Growth in HNI vs Retail folios |
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|
HNI Folios |
Category |
Jun-15 |
Jun-16 |
Change |
|
Equity |
7,31,253 |
9,30,856 |
27% |
|
|
Balanced |
83,961 |
1,44,367 |
72% |
|
|
|
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|
Retail Folios |
Equity |
3,16,46,353 |
3,54,37,756 |
12% |
|
Balanced |
19,91,859 |
24,47,304 |
23% |
|
Equity
HNI folios in equity funds increased by 27% while retail folios grew 12%. Consequently, the assets too grew at a much faster pace than retail. HNI assets in equity funds grew 18% while retail assets grew 16%. “HNIs are able to spot the trend before retail as they are more exposed. Many HNIs who either run their own businesses or head companies are seeing their profitability rise due to the uptick in the economy. So they are bullish and are investing in equities,” adds Nisreen.
However, some advisers say that the trend may reverse. Kartik Jhaveri of Transcend Consulting says “It is natural for HNIs to be attracted to equity as the markets have risen. However, this trend may reverse once the market falls.”
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Growth in HNI vs Retail AUM |
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|
|
Category |
Jun-15 |
Jun-16 |
Change |
|
HNI |
Equity |
1,16,847 |
1,38,047 |
18% |
|
Balanced |
14,466 |
21,639 |
50% |
|
|
|
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|
Retail |
Equity |
1,95,659 |
2,27,692 |
16% |
|
Balanced |
11,976 |
17,196 |
44% |
|
Asset composition
If we look at the composition of assets in equity funds, retail investors held a lion’s share (53%) at Rs. 2.27 lakh crore of total equity assets pie. On the other hand, HNIs held Rs. 1.38 lakh crore in equity funds. Steady inflows in equity funds through SIPs have helped the category cross Rs. 4 lakh crore mark in June.
While HNIs folios are rising at a faster pace, the total base of HNIs is smaller as compared to retail. The total folio count of HNIs is 19.03 lakh while retail folios stand at 4.65 crore.
HNIs have a higher average ticket size as compared to retail. According to AMFI, the average ticket size of retail folio is Rs. 65,773 while that of HNIs is Rs. 20 lakh.
