The corpus with smallcap funds has doubled since 2019, emerging as the fastest-growing segment, a study by AMFI-Crisil has revealed, with women investors now accounting for a third of Asset Under Management (AUM) belonging to individual investors.
The latest AMFI-Crisil Factbook has shown that SIP AUM has grown significantly, with smallcap funds emerging as the fastest-growing segment. Women investors have an increasingly important role in mutual fund investments, given that their AUM has more than doubled from Rs 4.59 lakh crore in March 2019 to Rs 11.25 lakh crore in March 2024.
Women Investors Firmly Betting on Equities
Women now account for 33 percent of total individual investors’ AUM. The number of women mutual fund investors has increased significantly, with one in every four unique mutual fund investors now being a woman.
Women also demonstrated a faster growth rate in average folio size compared to men, and according to the report, their average folio size was around 24%, versus 6% for men, between March 2019 and March 2024.
Shift Towards Smallcap Funds
The smallcap category has outperformed other equity categories in terms of SIP inflow, accounting for over half of the total AUM. The robust inflow indicates a shift in investor preference toward high-growth potential companies. Some fund houses have had to implement measures to restrict lumpsum investments in smallcap funds, keeping in mind the inherently volatile nature of the smallcap universe.
Equities Driving SIP Surge
Equity funds now account for more than 80 percent of the total SIP AUM, which reflects investors’ strong preference for longer term wealth creation. Over the past five years, SIP AUM in the smallcap category has exponentially surged from Rs 0.19 lakh crore in March 2019 to Rs 1.24 lakh crore in March 2024. Regular investment in midcap funds too has grown, with nearly 46 percent of the category AUM coming from SIPs. While most equity categories have seen a rise in SIP AUM as a percentage of category AUM, sectoral/thematic and dividend yield categories saw a fall in the share of SIP AUM.
Systematic Investment Plans gain popularity
The industry-wide SIP AUM saw a 300% rise from Rs 2.66 lakh crore in March 2019 to Rs 10.62 lakh crore in March 2024. The number of unique mutual fund investors too has more than doubled in five years, from 2.1 crore in March 2019 to 4.5 crore in March 2024. The rising acceptance of SIP among investors in the 18-34 age group has been a crucial factor in this expansion. According to the report, SIP AUM for investors in this age group surged by more than 2.6 times, from Rs 41,209 crore in March 2019 to Rs 1.51 lakh crore in March 2024.
Rise of Passive Funds
Passive funds emerged as one of the fastest-growing categories, with AUM rising at a CAGR of 44.4 percent between March 2019 and March 2024. Index funds gained traction with SIP AUM growing 29x in the last five years to Rs 23,355 crore. The share of passive funds in the mutual fund AUM rose from 6.1% in 2019 to 17% in 2024, reflecting a growing preference for low-cost investment options. High-networth individuals (HNIs) have also shown increased interest in passive funds, with AUM surging 56x to reach Rs 1.26 lakh crore between March 2019 and March 2024.
Digital Boost for SIPs
With nearly 90% of mutual fund purchases occurring through digital channels, online platforms have played a crucial role in the expansion of SIP investment. Fintech platforms and digital on-boarding processes have made mutual fund investing more accessible, particularly in Tier-II and III cities. According to the report, in FY19, 78.9% of mutual fund purchase transactions were done via digital channels, a proportion that has increased to 89.4% of all mutual fund purchases in FY24.
Regular Investment Has Longer Holding Period
Though the share of direct investments rose between March 2019 and March 2024, regular investments continues to dominate, with a 58.8 percent share as of March 2024. Additionally, retail and HNI investments constitute 78.4 percent of AUM via regular plans. Regular investments have shown to have a longer holding-period profile in comparison to direct investments, as per the AMFI-Crisil Factbook.
The report added, "…the share of regular investments with more than 5 years of holding period stood at 21.2% as against 7.7% in case of direct investments." This shows the guidance by intermediaries has been helpful in fostering longer term investor discipline, the factbook said. A similar trend was seen for holding periods of direct and regular SIP AUMs.
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