The Mutual Fund (MF) industry will cross 50 million unique investors by September of this year. The addition has been ongoing for over a year and has more than 10 million investors. A strong equity market and the NFO wave primarily drive it.
Hence, historically, it took the industry 21 months to add its last 10 million investors, while it took over 26 months to add its previous growth from 20 million to 40 million. The count of unique investors is pegged on the number of permanent account numbers registered with MF schemes.
Executives of the industry say it is new investors who are attracted by the increased popularity of equity investments. “Today, more people are turning to market-linked investments like mutual funds to participate in India’s growth,” said D.P. Singh, deputy managing director and joint CEO of SBI Mutual Fund. “As confidence in India’s growth story continues to build, we look forward to a large-scale migration of investors into the capital markets.”.
This is why Swarup Anand Mohanty, vice-chairman and CEO of Mirae Asset Investment Managers, is also optimistic. The interest alone in equities and systematic investment plans (SIPs) will take the investor base to as high as 100 million in the next three to four years; he is upbeat. “We expect this industry to hit 2030 for crossing 100 million investor base with more than ₹100 trillion AUM,” said an industry hopeful.
Retail interest in equities, which have gained traction since the pandemic, is rising. Still, the jump in investor counts can largely be attributed to a good market rally and successful equity schemes launched in recent months. Benchmark indices like Nifty 50 and S&P BSE Sensex are up approximately 30% over the last year. Fund houses have launched 21 active equity schemes from May to August and raised nearly ₹48,735 crore.
Groww, a leading direct plan distributor, said that over the last two years, the SIP investor base has tripled with greater upticks in urban and non-urban geographies. States showing the highest growth include Maharashtra, Uttar Pradesh, West Bengal, Bihar, Karnataka, and Delhi, noted Groww. It said that almost 80% of investments come on its platform from outside the top six cities.
Factors behind this growth include optimism in the economy, development in the banking and financial services industries, and awareness campaigns by the industry. The motivation for SIP has been the main driving force behind mutual funds being an attractive choice for equity investment. According to a report, active SIP accounts now stand at more than 99 million, with nearly 19.7 million accounts opening in the first eight months of this year. This figures to almost 15.1 million accounts for the whole calendar year of 2023.
