Retail Investors lead the way in mutual fund investments

Benchmark equity indices are touching new highs every day and recently BSE Sensex touched new milestone of 35,000, if the trend continues, we could see Nifty to touch 11,000 marks soon. The rise in the equity market is getting reflected in the rise of the overall asset under management (AUM) of Indian mutual fund industry including equity AUM. Assets managed by the Indian mutual fund industry have grown from Rs. 17.06 lakh crore in December 2016 to Rs. 22.60 lakh crore in December 2017.

It is the equity-oriented fund that has contributed most to this rise in AUM. Total inflows to the equity component remained at Rs 3.43 lakh crore in the year 2017. This has helped the equity-oriented schemes to increase their share in the overall AUM of Indian mutual fund industry to 38 per cent at the end of 2017 from 32 per cent at the end of December 2016. The proportionate share of debt-oriented schemes in the same period declined from 46.7 to 38.1 per cent of industry assets. Liquid and money market schemes form 19.5 per cent of total industry assets.

One bigger and remarkable change that was clearly visible in last year's mutual fund data was that retail investors or individual investors taking a dominant position in mutual fund investing. It has consistently increased its share from 44.5 per cent at the end of January 2017 to 50.6 per cent at the end of December 2017. Institutional investors account for 49.4 per cent of the assets, of which corporates are 89 per cent. The rests are Indian and foreign institutions and banks.

Individual investors primarily hold equity-oriented schemes, while institutions hold liquid and debt-oriented schemes. Two-third of the individual investor assets are held in equity-oriented schemes while the figure for institutional investors is just one-fifth. Institutional investors hold most of their assets in liquid/money market schemes and debt-oriented schemes.