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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