Individual investments in mutual funds expected to grow at 21.04% CAGR in the next five years to reach Rs. 30.34 lakh crore by FY 2022-23, says the ninth edition of Karvy Wealth Report. Currently, individual investors have assets of close to Rs.10 lakh crore in mutual funds. Individual investors includes HNIs and retail investors.
Subsequently, mutual funds will occupy 5.86% wallet share of individual investors financial assets.
Moreover, as of FY 17-18, 68% of individual wealth invested in mutual funds is in equities. Abhijit Bhave, CEO Karvy Private Wealth expects this number to increase in the coming years as more investors will look at mutual funds as one of the easiest way to participate in Indian equity markets.
The report also mentions that with a sustained bull run expected in equity markets in the coming years, direct equities are likely to remain the favourite of investors. According to Karvy estimates, direct equities will reach Rs. 145.98 lakh crore by FY 22-23 growing at 24.41% CAGR. Direct equities includes promoters shares as well.
Following direct equities, fixed deposits and insurance will take the next two spots in terms of investor’s allocation to financial assets.
Abhijit Bhave attributes the predominance of fixed deposits to the fact that many Indians have entered the financial asset space for the first time by opening a bank account in the last few years. Moreover, the safety associated with fixed deposits makes it a safe option for senior citizens and low wage earners.
Talking about insurance, Abhijit shared that the low penetration of the insurance sector (4%) makes a strong case for the investments in the asset class to grow in the coming years. Insurance investments include investments in life insurance policies excluding term plans.
Projected financial wealth of individuals
