Millennials who largely prefer to DIY (do it yourself) mode seek advice when it comes to starting their investment journey, shows a recent CAMS report titled ‘Growing preference of mutual funds with millennials’. Millennial investors are the ones who fall in the age group of 20-35 years.
Of the total 16 lakh new millennial investors who joined the industry in FY 18-19, 86% that is 14.4 lakh investors started investing with the help of an intermediary such as a bank, RIA or mutual fund distributor. Banks account for 30% of the 16 lakh new millennial investors.
Overall, CAMS, which accounts for 68% of the industry AUM, said that the MF industry has added 36 lakh new investors in FY 2018-19 across CAMS serviced fund houses. The company conducted a study on the demographics of these investors.
On a positive note, the study showed that nearly 63% of millennials have chosen the SIP route to invest in mutual funds. Even among those who entered with lump-sum investment, 45% have subsequently started an SIP. The study estimates that the industry could receive Rs.3000 per annum from millennials SIP accounts. Hand holding these first- time investors to stay invested is paramount for mutual funds and distributors, says the report.
In a press release, Anuj Kumar, President and CEO, CAMS said, “16 lakh new investors in the age range 20-35 augurs well for the industry. Nurturing and engaging with the millennials to grow their asset base over the next 25 years is a great opportunity. In addition, with nearly 26% of the millennial investors diversifying into a second fund in the very first year, the trend also points to growing confidence of this segment in mutual funds.”
Other notable trends
Geographical distribution shows that majority of new millennials investors i.e. around 76% were from T30 cities. However, mutual funds have been gaining popularity among millennials in tier 2 and tier 3 cities too, said the report.
While male investors dominate this segment, 24% of the new millennial investors were women, reflecting their financial independence.
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