In FY22, over 30 mn folios added by Mutual Funds on equity, digitisation rally

• ByStartupStory     |    April 18, 2022

With experts saying the trend is likely to continue this fiscal as well by increasing awareness about mutual funds, easing of transactions through digitisation and sharp surge in equity markets have aided asset management companies in order to add a staggering 3.17 crore investor accounts in 2021-22.

Data with the Association of Mutual Funds in India (Amfi) showed that, this was a significant rise from 2020-21 when 81 lakh accounts (or folios in mutual fund parlance) were opened.

As increase in investor accounts will enable people to move beyond fixed deposits and savings accounts, the ongoing financial year too appears to be promising in terms of folios, said Priti Rathi Gupta, founder of LXME, a financial platform for women.

Some of the elements that may have an impact on this industry are market conditions, financialisation of investments, geopolitical situations, inflation rates, and increasing awareness among the people, she added.

The folios are expected to decline, if the retail investors get spooked by the market turbulence driven by change in interest rates, said Swapnil Bhaskar, Head of Strategy, Niyo — a millennial-focused neo-banking fintech.

According to the data, the number of folios with 43 fund houses rose from 9.78 crore in March 2021 to 12.95 crore in March 2022, registering a gain of 3.17 crore during the one-year period.

In May 2021, the industry crossed a milestone of 10 crore folios.

As of March 2022, the number of folios under equity, hybrid and solution oriented schemes, wherein from retail segment there is the maximum investments, that stood at about 10.34 crore.

In order to get investor accounts, Folios are numbers designated. Multiple folios can be used by an investor

In the past few years, the mutual fund space has been witnessing consistent growth in folio numbers.

It saw an addition of 73 lakh investor accounts in 2019-20, over 67 lakh in 2016-17, 1.13 crore in 2018-19, 1.6 crore in 2017-18, and 59 lakh in 2015-16.

Some tailwinds that are supporting the industry include strong distribution platforms, increasing mutual fund (MF) awareness, and ease of transactions through digitisation, which was further driven by the COVID-19 pandemic.

According to LXME’s Gupta, as the investors are expecting good returns based on past market outperformance despite the ongoing pandemic, multiple factors have enabled the growth in MF folios, like an increase in digitisation, increased awareness, availability of easy-to-consume information, and a mindset shift from traditional instruments to mutual funds.

Also, the industry has been able to bring in new investors, with AMCs deepening their branch network, and increase in distribution touchpoints across length and breadth of the country, he noted.

Jimmy Patel, MD and CEO, Quantum AMC, said as investors are looking at options beyond traditional avenues, interest rates have been moderating. Further, boosting participation by retail investors has been helped by the increased awareness about mutual funds.

About 1.95 crore folios, of the 3.16 crore addition, were added in equity-oriented schemes. Investors’ accounts in equity-oriented schemes (open and close ended) rose from 6.68 crore in March 2021 to 8.63 crore in March 2022.

Since mutual funds are the most convenient and the best way in order to invest in equities, more and more investors are investing in them, he pointed out.

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