MF industry adds 81 lakh new investor accounts in April-May

New Delhi: The mutual fund industry has added over 81 lakh investors’ accounts in the first two months of FY25, mainly due to consistent marketing efforts, celebrity endorsements and dedicated work of the distribution network.

Additionally, changing perceptions about fixed deposits, which no longer offer competitive returns compared to mutual funds, and the rise in income levels and accessibility to financial markets have also contributed to the rise in new investors, Trivesh D, COO of stock trading platform Tradejini, said.

Going ahead, the outlook for mutual fund folios remains strong, supported by the ongoing bull run in the stock market, solid risk management practices, continuous investor education, and consistent marketing efforts, he added.

“As India’s per capita income grows, investors will look to save money in asset classes, which have the potential to beat inflation and create wealth. As the penetration of mutual funds increases, this will translate into a higher folio base at the industry level,” Abhishek Tiwari, CBO, PGIM India Mutual Fund, said.

According to the latest data with the Association of Mutual Funds in India (AMFI), mutual fund folios of the industry stood at 18.6 crore in May-end, a surge of 4.6 per cent from 17.78 crore registered at the end of March.

This suggests an addition of over 81 lakh folios.

In May, the industry saw an addition of 45 lakh folios compared to 36.11 lakh folios added in April. In 2023, the average monthly addition of folios was 22.3 lakh, making the latest figure more than double this average.

This impressive growth was fuelled by consistent marketing efforts, celebrity endorsements, dedicated work of the distribution network, robust returns given by equities and ease of investing, experts said.

Folios are numbers designated to individual investor accounts. An investor can have multiple folios.

Interestingly, the majority of the new investors are taking the route of digital channels to enter into the mutual fund space. Over the last few years, the surge in mutual fund folios has been led by Gen-Y and Gen-Z investors.

Millennials, also known as Gen Y, are typically defined as those born between 1981 and 1996. Generation Z, or GenZ, are those born between 1997 and 2012.

Overall, the total number of unique PAN and PAN-exempt KYC reference numbers stood at 4.59 crore as of May 2024.

“Investors tend to hold multiple folios, and thus we should look at increasing the total unique number of unique investors in the industry. We believe the growth will come from increasing foot soldiers of distributors and advisers in hinterlands, increased adoption of technology and smartphones and an overall increase in awareness about mutual funds,” he added.

Of the total 81 lakh folios, equity-oriented mutual fund schemes experienced an addition of 61.25 lakh units during the period under review. This has taken the number of such folios to a new high of 12.89 crore, representing 69 per cent of the total.