Despite flat market conditions in 2016, a recent AMFI report shows that individual investors have steadily invested in equity funds. The AUM of individual investors in equity funds has increased from Rs.3.63 lakh crore in December 2015 to Rs.4.45 lakh crore in December 2016, marking a 22% increase in equity investments.
Individual investors include both retail and HNI investors. An investment of Rs. 5 lakh or more by an individual is deemed to be HNI and below Rs. 5 lakh to be retail.
Swarup Anand Mohanty, CEO Mirae Assets, attributes this growth to the performance of funds. “The first reason according to me is that there are many funds that have consistently delivered returns despite the volatility in the markets. This has increased investor confidence in equity. Another reason could be the increase in SIPs. The market is currently seeing monthly SIP inflows of Rs.4000 crore per month,” he says.
Shifali Satsangee of Funds Vedaa seconds this view and adds, “The district adoption programmes and IAPs have paid off well. It has helped investors understand the significance of staying put for the long term irrespective of market conditions.”
Though the investments in equity have increased, the asset allocation of individual investors remain unchanged. AMFI data shows that the percentage of equity to overall investment stood at 58% for the last two years.
Chennai-based IFA D Muthukrishnan, feels that the risk appetite of many investors has remained the same for the past two to three years. He said, “While there have been decent inflows in equity and debt, the risk appetite of most of my customers has remained more or less the same. There will be a shift in investment psychology of individuals once the market conditions change drastically.”
Overall, individual investors held Rs.7.61 lakh crore in mutual funds as on December 2016, an increase to 23% in one year.
