Individual investors contribution in debt funds declines in 5 years

Cafemutual’s analysis of the AMFI data shows that the proportion of individual investors in debt funds has declined from 36% in 2019 to 29% in 2024.

Within individual investors, the proportion of retail investors in debt AUM has decreased from 7.5% in 2019 to 2.9% in 2024. The retail AUM in debt schemes decreased from Rs. 87,300 crore in 2019 to Rs. 37,100 crore in 2024.

Meanwhile, the proportion of HNI investors in debt AUM has reduced marginally from 28.5% in 2019 to 26.2% in 2024. However, the AUM of HNI investors in debt schemes has increased marginally from Rs. 3.32 lakh crore in 2019 to Rs. 3.37 lakh crore in 2024.

The total debt AUM has increased from Rs.11.66 lakh crore in 2019 to Rs. 12.86 lakh crore in 2024.

In liquid funds, the AUM has increased from Rs. 4.36 lakh crore in 2019 to Rs. 6.25 lakh crore in 2024. The retail investor AUM in this category has decreased from Rs. 13,000 crore in 2019 to Rs. 10,200 crore in 2024. On the other hand, the AUM of HNI clients has increased from Rs. 65,600 crore in 2019 to Rs. 1 lakh crore in 2024. 

Sandeep Bagla, CEO, Trust MF attributes this decline to removal of tax benefits. He said, “Currently, investors do not get any tax benefits in debt funds. Interest rates have also been rising during this period, which has reduced the returns in debt-oriented schemes. Also, the good performance of equity markets made them more attractive to investors.”

Shimla-based MFD Vikrant Katoch from RupeeXpress also echoes similar views and said, “Debt funds are no longer attractive for individual investors due to removal of indexation benefits.” He, however, feels that many investors have been using liquid funds to do STPs in mutual funds.

Rajesh Kulwal from Duoak Finserv points out that many individual investors now prefer multi asset allocation fund and balanced advantage funds to deploy fixed income money.

Let us look at the tables to know more.