40% of retail debt assets stays invested for more than 2 years

Retail investors’ long-term holdings in debt funds have been impacted in the last one year.

AMFI’s latest data shows that 40% of retail debt assets has stayed invested for more than 2 years.

The proportion of retail assets that have remained invested in debt funds for more than 2 years have declined from 46% in March 2020 to 40% in March 2021.

Of the total retail debt AUM of Rs.67,525 crore, Rs.27,132 crore has stayed put for more than two years as on March 2021, shows the age-wise analysis of MF assets by AMFI.

DP Singh, CBO, SBI MF believes that this is due to stellar performance of equity funds.

“Equities have performed extraordinarily in the last one year thereby grabbing all retail investors attention. The fact that equities were on a bull run meant many investors pulled out of debt funds and invested in equities in hope of higher returns,” said Singh.

Swarup Mohanty, CEO, Mirae Asset MF feels that debt assets are not meant to be held for a very long period of time. “Usually, debt investors do not match their investment period to the tenure of the underlying papers. Many investors invest for short term in debt funds. But this has to be changed,” he said.

Ajit Menon, CEO, PGIM India Mutual Fund said that the decline in holding period of debt assets could be due to the pandemic. He said that many people have witnessed a fall in their overall income which led to redemption from both equity and debt funds.

Longevity of retail debt assets as on March 2021: