With increase in digital access and growing awareness about mutual funds, asset management companies (AMCs) have added close to 70 lakh investor accounts in the first five months of the current fiscal, bringing the total to 13.65 crore.
This came following an addition of 3.17 crore investor accounts in 2021-22 and 81 lakh accounts (or folios in mutual fund parlance) in 2020-21, data with the Association of Mutual Funds in India (Amfi) showed.
The sharp increase in mutual fund (MF) folio count implies that a lot of new investors are coming into the capital markets and are embracing mutual funds as their preferred vehicle for investing.
"Demonetisation led financialisation of household savings, further propelled by pandemic led lockdown, generational shift in risk appetite and saving pattern, systematic investment plans becoming way of life and a long term structurally bullish market are primary reason for increasingly larger number of investors investing in mutual funds," said Akhil Chaturvedi, Chief Business Officer at Motilal Oswal Asset Management.
Priti Rathi Gupta, Founder and MD, LXME, attributed the increase in folio numbers to a number of factors, including increased awareness among the people driven by literacy programs, advertising campaigns, easy-to-consume information, increased digitalisation and participation of women.
Also, a mindset shift from traditional investment instruments to mutual funds helped in growing the investor accounts.
According to the data, the number of folios with 43 fund houses rose to an all-time high of 13.65 crore in August 2022 from 12.95 crore in March 2022, registering a gain of 70 lakh during the period.
The industry crossed the milestone of 10 crore folios in May 2021.
Post COVID, Indian equity markets have surged sharply, thus attracting investors interest. Also, during the recent testing times, Indian markets have displayed better resilience than most of the other global markets, and that has not gone unnoticed, said Himanshu Srivastava, Associate Director - Manager Research, Morningstar India.
Industry experts believe that the total folio tally at 13.65 crore has a long way to grow.
When it comes to investor-type composition of mutual fund assets, the share of industry assets of retail investors has increased from 55.2 per cent in March to 56.6 per cent in August. This suggests that individuals are working towards channelising their savings better.
The number of folios under equity, hybrid and solution oriented schemes, wherein the maximum investment is from retail segment, stood at about 10.85 crore as of August 2022.
"We are in the midst of a structural trend with rising equity ownership among retail investors. With higher levels of education and favourable regulations, households have become more risk aware," Chaturvedi added.
Folios are numbers designated to individual investor accounts. An investor can have multiple folios.
The mutual fund space has been witnessing consistent growth in folio numbers in the past few years.
It saw an addition of 73 lakh investor accounts in 2019-20, 1.13 crore in 2018-19, 1.6 crore in 2017-18, over 67 lakh in 2016-17 and 59 lakh in 2015-16.
