Interested to know which mutual funds retail investors prefer, how high Networth Individuals invest? Let us take a look at the Association of Mutual Funds in India – AMFIs AUM-Category / Age-Wise and Folio Data as on June 30th 2019. I had recently used this to find out how popular index investing is in India (see video below).
The AMFI uses four investor classifications: Corporates; Banks/FIs; FIIs; High Networth Individuals (HNIs); Retail; HNIs are those who can invest Rs. 2 lakh or more (I assume in one shot in any scheme, not just NFO). FI is an Indian Financial Institution, FIIs are Foreign Institutional Investors. This is the vision document of the industry to increase its foothold
The MF industry manages 24,25,040.35 Crores as on June 30th 2019 spread (unevenly) across 83,771,689 folios. Let us look at which categories are popular among each investor type as a percentage of this total AUM.
Let us begin with the share for each investor type. The main source of revenue for AMCs is from corporates and HNIs. Retails is significant but only third. MF penetration among Banks and FIs is surprisingly low!
Investor Classification
Total AUM
Corporates
39.79%
Banks/FIs
1.93%
FIIs
0.36%
High Networth Individuals*
34.03%
Retail
23.89%
Corporates
Corporates prefer to park most of their money in liquid or overnight funds with almost an equal amount in other debt funds. Surprised to find 2% of the total AUM in hybrid funds!
Category
Corporates
Liquid Fund/Money Market Fund/ Floater Fund
14.96%
Remaining Income/ Debt Oriented Schemes
14.05%
ETFs(other than Gold)
5.41%
Growth/ Equity Oriented Schemes
2.95%
Hybrid Schemes
2.00%
Gilt Fund/ Gilt Fund with 10-year constant duration
0.21%
Index Funds
0.10%
Gold ETF
0.09%
Fund of Funds investing Overseas
0.02%
Solution-Oriented Schemes
0.00%
High Networth Individuals
The HNIs prefer longer duration debt funds, equity funds and hybrid funds! The shorter duration debt fund share is surprisingly low suggesting that they prefer other means for liquidity. Impressed that HNIs like Hyrbid funds.
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Scheme Category
High Networth Individuals
Remaining Income/ Debt Oriented Schemes
10.90%
Growth/ Equity Oriented Schemes
10.78%
Hybrid Schemes
8.16%
Liquid Fund/Money Market Fund/ Floater Fund
3.56%
ETFs(other than Gold)
0.17%
Solution-Oriented Schemes
0.16%
Gilt Fund/ Gilt Fund with 10-year constant duration
0.11%
Index Funds
0.07%
Gold ETF
0.07%
Fund of Funds investing Overseas
0.05%
Mutual Fund Categories Preferences for Retail Investors
Scheme Category
Retail
Growth/ Equity Oriented Schemes
17.44%
Hybrid Schemes
3.74%
Remaining Income/ Debt Oriented Schemes
1.51%
Solution-Oriented Schemes
0.53%
Liquid Fund/Money Market Fund/ Floater Fund
0.44%
ETFs(other than Gold)
0.07%
Index Funds
0.07%
Gold ETF
0.05%
Gilt Fund/ Gilt Fund with 10-year constant duration
0.03%
Fund of Funds investing Overseas
0.02%
Observations
In the case of retail investors, there is a significant skew towards diversified equity funds. It is a shame that the hybrid share is quite poor. Even today the direct share of the retail AUM is only about 12% or so. So the choices here are primarily driven by sales guys with a projection of huge returns in the future (without this no one would buy!!)
The HNI direct share is twice that of retail. This could be a reason why HNIs prefer hybrid scheme a lot more. Also, the sale guys may be offering “lower” version so that the higher AUM is stickier.
How popular is index investing in India?
The full data reported category-wise is presented below.
Liquid Fund/Money Market Fund/ Floater Fund
Investor Classification
AUM (Rs. Cr)
% to Total
Corporates
362782.6
73.7
Banks/FIs
32269.5
6.56
FIIs
108.02
0.02
High Networth Individuals
86327.06
17.54
Retail
10773.05
2.19
Total
492260.2
100
Investor Classification
No of Folios
% to Total
Corporates
53111
2.64
Banks/FIs
1745
0.09
FIIs
659
0.03
High Networth Individuals*
376419
18.75
Retail
1576063
78.49
Total
2007997
100
Gilt Fund/ Gilt Fund with 10-year constant duration
Investor Classification
AUM (Rs. Cr)
% to Total
Corporates
5031.07
58.56
Banks/FIs
76.48
0.89
FIIs
176.92
2.06
High Networth Individuals*
2627.5
30.58
Retail
679.61
7.91
Total
8591.57
100
Investor Classification
No of Folios
% to Total
Corporates
2261
2.55
Banks/FIs
37
0.04
FIIs
8
0.01
High Networth Individuals*
10591
11.96
Retail
75685
85.44
Total
88582
100
Remaining Income/ Debt Oriented Schemes
Investor Classification
AUM (Rs. Cr)
% to Total
Corporates
340834.8
52.11
Banks/FIs
10425.02
1.59
FIIs
1930.15
0.3
High Networth Individuals*
264339.9
40.42
Retail
36511.63
5.58
Total
654041.5
100
Investor Classification
No of Folios
% to Total
Corporates
101474
2.29
Banks/FIs
2183
0.05
FIIs
41
0
High Networth Individuals*
1319173
29.71
Retail
3017018
67.95
Total
4439889
100
Growth/ Equity Oriented Schemes
Investor Classification
AUM (Rs. Cr)
% to Total
Corporates
71556.22
9.41
Banks/FIs
962.27
0.13
FIIs
3145.33
0.41
High Networth Individuals*
261523
34.4
Retail
423002.8
55.64
Total
760189.6
100
Investor Classification
No of Folios
% to Total
Corporates
193563
0.32
Banks/FIs
784
0
FIIs
555
0
High Networth Individuals*
3264403
5.38
Retail
57171840
94.29
Total
60631145
100
Hybrid Schemes
Investor Classification
AUM (Rs. Cr)
% to Total
Corporates
48539.8
14.31
Banks/FIs
233.17
0.07
FIIs
1741.51
0.51
High Networth Individuals*
197826.5
58.34
Retail
90750.73
26.76
Total
339091.7
100
Investor Classification
No of Folios
% to Total
Corporates
67736
0.71
Banks/FIs
172
0
FIIs
43
0
High Networth Individuals*
1512225
15.84
Retail
7965494
83.45
Total
9545670
100
Solution Oriented Schemes
Investor Classification
AUM (Rs. Cr)
% to Total
Corporates
33.32
0.2
Banks/FIs
0.01
0
FIIs
0
0
High Networth Individuals*
3944.42
23.48
Retail
12824.17
76.33
Total
16801.92
100
Investor Classification
No of Folios
% to Total
Corporates
129
0
Banks/FIs
1
0
FIIs
0
0
High Networth Individuals*
47261
0.88
Retail
5332658
99.12
Total
5380049
100
Index Funds
Investor Classification
AUM (Rs. Cr)
% to Total
Corporates
2377.27
41.57
Banks/FIs
2.7
0.05
FIIs
0
0
High Networth Individuals*
1752.27
30.64
Retail
1586.76
27.75
Total
5719
100
Investor Classification
No of Folios
% to Total
Corporates
2101
0.67
Banks/FIs
3
0
FIIs
0
0
High Networth Individuals*
20132
6.41
Retail
291755
92.92
Total
313991
100
Gold ETF
Investor Classification
AUM (Rs. Cr)
% to Total
Corporates
2103.42
42.66
Banks/FIs
7.6
0.15
FIIs
0
0
High Networth Individuals*
1688.49
34.25
Retail
1130.92
22.94
Total
4930.43
100
Investor Classification
No of Folios
% to Total
Corporates
2931
0.89
Banks/FIs
12
0
FIIs
0
0
High Networth Individuals*
20070
6.13
Retail
304502
92.97
Total
327515
100
ETFs(other than Gold)
Investor Classification
AUM (Rs. Cr)
% to Total
Corporates
131258
92.83
Banks/FIs
2771.48
1.96
FIIs
1628.05
1.15
High Networth Individuals*
4105.35
2.9
Retail
1626.49
1.15
Total
141389.4
100
Investor Classification
No of Folios
% to Total
Corporates
11627
1.28
Banks/FIs
51
0.01
FIIs
11
0
High Networth Individuals*
41555
4.57
Retail
856053
94.14
Total
909297
100
Fund of Funds investing Overseas
Investor Classification
AUM (Rs. Cr)
% to Total
Corporates
414.15
20.45
Banks/FIs
0
0
FIIs
0
0
High Networth Individuals*
1101.63
54.4
Retail
509.27
25.15
Total
2025.05
100
Investor Classification
No of Folios
% to Total
Corporates
788
0.62
Banks/FIs
0
0
FIIs
0
0
High Networth Individuals*
9045
7.09
Retail
117721
92.29
Total
127554
100
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About the Author
M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management. He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice.He conducts free money management sessions for corporates and associations on the basis of money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association.For speaking engagements write to pattu [at] freefincal [dot] com
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1 Comment
I don’t disagree with your overall assessment but in the example you have ignored the extra ₹60000 that the person was getting and assuming the same was put in recurring deposits my rough estimate is that he would get somewhere around ₹180000 against the required ₹ 3.25 lacs.
M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management. He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice.
This book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now. It is also available in Kindle format.
This book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a young earner
I don’t disagree with your overall assessment but in the example you have ignored the extra ₹60000 that the person was getting and assuming the same was put in recurring deposits my rough estimate is that he would get somewhere around ₹180000 against the required ₹ 3.25 lacs.