Which Mutual Fund Categories do Retail Investors Use? AMFI Report

Published on / By M. Pattabiraman Twitter: @pattufreefincal / 1 Comment

Published: October 4, 2019 at 10:36 am

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 ClassificationTotal AUM
Corporates39.79%
Banks/FIs1.93%
FIIs0.36%
High Networth Individuals*34.03%
Retail23.89%

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!

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    CategoryCorporates
    Liquid Fund/Money Market Fund/ Floater Fund14.96%
    Remaining Income/ Debt Oriented Schemes14.05%
    ETFs(other than Gold)5.41%
    Growth/ Equity Oriented Schemes2.95%
    Hybrid Schemes2.00%
    Gilt Fund/ Gilt Fund with 10-year constant duration0.21%
    Index Funds0.10%
    Gold ETF0.09%
    Fund of Funds investing Overseas0.02%
    Solution-Oriented Schemes0.00%

    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.

    Scheme CategoryHigh Networth Individuals
    Remaining Income/ Debt Oriented Schemes10.90%
    Growth/ Equity Oriented Schemes10.78%
    Hybrid Schemes8.16%
    Liquid Fund/Money Market Fund/ Floater Fund3.56%
    ETFs(other than Gold)0.17%
    Solution-Oriented Schemes0.16%
    Gilt Fund/ Gilt Fund with 10-year constant duration0.11%
    Index Funds0.07%
    Gold ETF0.07%
    Fund of Funds investing Overseas0.05%

    Mutual Fund Categories Preferences for Retail Investors

    Scheme CategoryRetail
    Growth/ Equity Oriented Schemes17.44%
    Hybrid Schemes3.74%
    Remaining Income/ Debt Oriented Schemes1.51%
    Solution-Oriented Schemes0.53%
    Liquid Fund/Money Market Fund/ Floater Fund0.44%
    ETFs(other than Gold)0.07%
    Index Funds0.07%
    Gold ETF0.05%
    Gilt Fund/ Gilt Fund with 10-year constant duration0.03%
    Fund of Funds investing Overseas0.02%

    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?

    https://www.youtube.com/watch?v=OEWp0EsNqQ0

    The full data reported category-wise is presented below.

    Liquid Fund/Money Market Fund/ Floater Fund

    Investor ClassificationAUM (Rs. Cr)% to Total
    Corporates362782.673.7
    Banks/FIs32269.56.56
    FIIs108.020.02
    High Networth Individuals86327.0617.54
    Retail10773.052.19
    Total492260.2100
    Investor ClassificationNo of Folios% to Total
    Corporates531112.64
    Banks/FIs17450.09
    FIIs6590.03
    High Networth Individuals*37641918.75
    Retail157606378.49
    Total2007997100

    Gilt Fund/ Gilt Fund with 10-year constant duration

    Investor ClassificationAUM (Rs. Cr)% to Total
    Corporates5031.0758.56
    Banks/FIs76.480.89
    FIIs176.922.06
    High Networth Individuals*2627.530.58
    Retail679.617.91
    Total8591.57100
    Investor ClassificationNo of Folios% to Total
    Corporates22612.55
    Banks/FIs370.04
    FIIs80.01
    High Networth Individuals*1059111.96
    Retail7568585.44
    Total88582100

    Remaining Income/ Debt Oriented Schemes

    Investor ClassificationAUM (Rs. Cr)% to Total
    Corporates340834.852.11
    Banks/FIs10425.021.59
    FIIs1930.150.3
    High Networth Individuals*264339.940.42
    Retail36511.635.58
    Total654041.5100
    Investor ClassificationNo of Folios% to Total
    Corporates1014742.29
    Banks/FIs21830.05
    FIIs410
    High Networth Individuals*131917329.71
    Retail301701867.95
    Total4439889100

    Growth/ Equity Oriented Schemes

    Investor ClassificationAUM (Rs. Cr)% to Total
    Corporates71556.229.41
    Banks/FIs962.270.13
    FIIs3145.330.41
    High Networth Individuals*26152334.4
    Retail423002.855.64
    Total760189.6100
    Investor ClassificationNo of Folios% to Total
    Corporates1935630.32
    Banks/FIs7840
    FIIs5550
    High Networth Individuals*32644035.38
    Retail5717184094.29
    Total60631145100

    Hybrid Schemes

    Investor ClassificationAUM (Rs. Cr)% to Total
    Corporates48539.814.31
    Banks/FIs233.170.07
    FIIs1741.510.51
    High Networth Individuals*197826.558.34
    Retail90750.7326.76
    Total339091.7100
    Investor ClassificationNo of Folios% to Total
    Corporates677360.71
    Banks/FIs1720
    FIIs430
    High Networth Individuals*151222515.84
    Retail796549483.45
    Total9545670100

    Solution Oriented Schemes

    Investor ClassificationAUM (Rs. Cr)% to Total
    Corporates33.320.2
    Banks/FIs0.010
    FIIs00
    High Networth Individuals*3944.4223.48
    Retail12824.1776.33
    Total16801.92100
    Investor ClassificationNo of Folios% to Total
    Corporates1290
    Banks/FIs10
    FIIs00
    High Networth Individuals*472610.88
    Retail533265899.12
    Total5380049100

    Index Funds

    Investor ClassificationAUM (Rs. Cr)% to Total
    Corporates2377.2741.57
    Banks/FIs2.70.05
    FIIs00
    High Networth Individuals*1752.2730.64
    Retail1586.7627.75
    Total5719100
    Investor ClassificationNo of Folios% to Total
    Corporates21010.67
    Banks/FIs30
    FIIs00
    High Networth Individuals*201326.41
    Retail29175592.92
    Total313991100

    Gold ETF

    Investor ClassificationAUM (Rs. Cr)% to Total
    Corporates2103.4242.66
    Banks/FIs7.60.15
    FIIs00
    High Networth Individuals*1688.4934.25
    Retail1130.9222.94
    Total4930.43100
    Investor ClassificationNo of Folios% to Total
    Corporates29310.89
    Banks/FIs120
    FIIs00
    High Networth Individuals*200706.13
    Retail30450292.97
    Total327515100

    ETFs(other than Gold)

    Investor ClassificationAUM (Rs. Cr)% to Total
    Corporates13125892.83
    Banks/FIs2771.481.96
    FIIs1628.051.15
    High Networth Individuals*4105.352.9
    Retail1626.491.15
    Total141389.4100
    Investor ClassificationNo of Folios% to Total
    Corporates116271.28
    Banks/FIs510.01
    FIIs110
    High Networth Individuals*415554.57
    Retail85605394.14
    Total909297100

    Fund of Funds investing Overseas

    Investor ClassificationAUM (Rs. Cr)% to Total
    Corporates414.1520.45
    Banks/FIs00
    FIIs00
    High Networth Individuals*1101.6354.4
    Retail509.2725.15
    Total2025.05100
    Investor ClassificationNo of Folios% to Total
    Corporates7880.62
    Banks/FIs00
    FIIs00
    High Networth Individuals*90457.09
    Retail11772192.29
    Total127554100
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