Mutual funds lagged in adding new clients even as a record number of new investors piled into equity markets during the pandemic-ravaged FY21.
The mutual fund industry added 20 lakh unique investors last fiscal, taking the total count at 2.27 crore as of March 2021, said the Association of Mutual Funds of India. By contrast, the nation’s depositories added 1.03 crore new demat accounts during the period.
What that means is that mutual funds accounted for a fifth of new investors last fiscal—assuming all unique clients had demat accounts. A majority of new retail investors pumped money directly into stocks as the market rebounded from March 2020 lows.
Unique mutual fund investors—identified based on unique PAN cards, and include individuals and non-individuals (corporates)—doubled over the last four years and the pace of addition jumped in the quarter ended June. Still, they account for 38% of the total equity investors as of June.
AMFI released unique investor data for the first time.
Central Depository Services Ltd. and National Securities Depository Ltd., according to their disclosures, together added 2.16 crore since March last year to 6.25 crore as of June. By comparison, unique mutual fund investors stand at 2.39 crore.
Investors in mutual funds are for the long term, unlike those in the equity markets who invest for the short term or are day traders, NS Venkatesh, chief executive officer at AMFI, said during a monthly call after releasing the equity investment data for June.
And the pace of addition has increased. The mutual fund industry, according to AMFI data, added 12 lakh unique investors in three months ended June. That’s more than half of the total addition in entire FY21.
For 2.39 crore unique investors, there are 10.3 crore folios. Meaning, every mutual fund client on an average has invested in four schemes.