The mutual fund AUM of individual investors is expected to more than double to $500 billion (Rs 37.5 lakh crore) by FY 2026 from $224 billion (Rs 16.8 lakh crore) in FY 2021, according to Paytm parent's draft IPO prospectus.
"Digital channels as a mode of investment has picked up pace rapidly contributing 55%-65% of all incremental mutual fund purchases in FY 2021 and is expected to drive 70% - 75% of all incremental purchases by FY 2026. On an overall level digital channels are expected to amount to ~55% of the overall mutual fund AUM by FY 2026," One97 Communications said in the prospectus citing a RedSeer report.
The company said that the overall investment in equities and mutual funds is expected to rise 2.6 times to $1.2 trillion (Rs 90 lakh crore) in five years. In FY 2021, the investment stood at $468 billion (Rs 35 lakh crore).
During the same period, the number of capital market investors are likely to more than double from current 40 million, it said.
"With the declining interest rates and increasing financial literacy, the penetration is expected to rise rapidly over next few years. This creates a massive opportunity for new age business models which have come up in India’s wealthtech space, targeting various customer cohorts," One97 Communications said.
According to the red herring prospectus, growth will be driven by these factors:
- Digital first platforms to drive accessibility and penetration within tier 2+ cities
- Growing investible surplus and falling returns on traditional asset classes
- Wealthtech platforms actively investing in educational platforms to drive up total investments
- Innovations such as robo-advisory, community-based investing to aid investors in taking investing decisions
- Increased accessibility of asset classes such as international equities, debt, ETFs, digital gold, etc
