Retail investors have been staying put for long term in mutual funds. Of the Rs.3.80 lakh crore retail equity assets, Rs.1.84 crore of retail equity AUM remains invested for more than two years as on September 2017, shows the age wise and folio wise disclosure published by AMFI.
Last year, Rs.1.44 lakh crore of retail equity AUM stayed put for over two years indicating a 28% rise in such assets.
Retail AUM is considered sticky as retail investors stay put for a longer period.
Swarup Mohanty, CEO, Mirae Asset Mutual Fund believes that the secular trend in the equities market has encouraged retail investors to stay put for long term. “Equity markets have been on an uptrend for the last three-two years. This has led to investor confidence in the market and hence they are staying invested for longer tenure,” says Swarup.
Seconding Swarup’s view, Suresh Sadagopan of Ladder7 Financial Advisories believes the trend would sustain in future. He says, “In a rising market, everyone wants to invest for attractive returns. As a long as the market stays bullish, we can expect a continuous rise in the long-term assets,” says Suresh.
Though there has been an increase in assets that has remained invested for more than two years, there has been a 6% decline in the percentage share of assets that was held steady for two years. AMFI data shows that retail equity AUM remaining invested for over two years to overall retail equity assets was 54% in September 2016 as against 48% in September 2017.
The data also shows that the percentage of retail investors that remained invested for less than a year has increased in the past one year. AMFI data shows that 34% or Rs.1.32 lakh crore of the retail equity assets remained invested for less than one year.
FIIs recorded the highest AUM to remaining invested for more than two years in percentage terms. AMFI data shows that 57% of FII’s AUM or Rs.2,718 crore remain invested for more than two years.
Experts say that the FIIs have invested in long-only funds such as arbitrage funds or balanced advantage funds and hence they stay invested for years.
AUM of domestic institutional investors (DIIs) like banks from a two-year perspective was the lowest. AMFI data shows that DII’s AUM in equity funds stood at Rs.272 crore in September 2017 as they do frequent churning due to their operational requirements.
