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.
| 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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