Equity assets have a longer average holding period as compared to non-equity assets
Despite the volatility in the equity market, investors prefer to stay put in the equity mutual fund schemes.
Data from the Association of Mutual Funds in India data revealed that 35 percent of the mutual fund industry’s equity assets had stayed invested for more than two years.
Equity assets have a longer average holding period as compared to non-equity assets.
In comparison, 28.4 percent industry’s equity assets in 2018 remained invested for more than two years in equity schemes.
Not only this, equity assets that have stayed for 12-24 months rose to 31.7 percent, compared with 22 percent a year ago.
Fund experts attribute this sticky money to matured investor behavior and investor education.
The investor education initiatives executed by all stakeholders in the mutual fund industry are showing positive results.
“During the 2008-09 period, most retail investors did not stick to equity funds for long. In the last 10 years, mutual fund investors have experienced the importance of long-term equity investments for wealth creation,” said Sougata Basu, Founder, CashRich, which is a wealth management app for investments in India.
In the debt space, there was no significant change in the trend. As of September 2019, 23.1 percent of the industry’s debt assets stayed invested for more than two years as compared to 24.5 percent a year ago.
"Some of this is expected. Non-equity funds include liquid funds. People invest in liquid funds for short term goals and also to set up a systematic transfer plan (STP) into equity funds," said Gaurav Rastogi, Chief Executive Officer, Kuvera, an online platform for mutual fund investments."We see a lot of investors taking the STP route to invest in equities. As such, the investors holding period for liquid funds tends to be very low and will affect the holding period for non-equity funds," Rastogi added.Are you happy with your current monthly income? Do you know you can double it without working extra hours or asking for a raise? Rahul Shah, one of the India's leading expert on wealth building, has created a strategy which makes it possible... in just a short few years. You can know his secrets in his FREE video series airing between 12th to 17th December. You can reserve your free seat here.