Individual investors repose faith in MFs despite tough markets in FY23: SEBI report

Exposure of corporate or institutional investors in mutual funds fell to 40.8 percent during FY23 from 43.5 percent in the preceding period.

The share of individual investors, which include both retail and high net worth individuals (HNI), rose to 55 percent in the total assets of the mutual fund industry during financial year 2022-23, driven by continuous growth of systematic investment plan (SIP) accounts.

These individual investors’ exposure in terms of percentage to total net assets of mutual funds stood at 52.7 percent during FY22, showed data provided in the Securities and Exchange Board of India’s (SEBI) latest annual report.

The rise in the unitholding pattern of mutual funds by individual investors came at the time when markets remained largely flat during the year.

Following two years of exceptional performance, Indian equity markets took a breather in 2022-23, with benchmark indices Nifty 50 and Sensex delivering negative of -0.48 percent and -1.76 percent, respectively, during the period.

The SEBI annual report also showed that the exposure of corporate and institutional investors in mutual funds fell to 40.8 percent during FY23 from 43.5 percent in the preceding period.

Retail push

Despite market gyrations, retail investors have largely remained bullish on stock markets and have been disciplined in their approach.

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Investments via systematic investment plans (SIPs) stood at Rs 14,734 crore in June 2023. Earlier, net inflows via SIPs had hit a fresh record high of Rs 14,749 crore in May.

SEBI data showed that during 2022-23, an incremental 1.6 crore folios were added to the mutual fund segment, taking the aggregate number of investor folios to 14.6 crore.

“Individual investors continued to hold dominant position in terms of share in total number of investor accounts and assets held. Individual investors accounted for 97.1 percent of the total folios while they commanded a share of 55 percent in the total assets during 2022-23,” SEBI said in the report.

Further, this was further accelerated by the continuous growth of SIP accounts.

During 2022-23, 2.51 crore new SIPs were registered, taking the total number of SIPs outstanding to 6.4 crore with total assets under management of Rs 6.8 trillion as on March 31, 2023.

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Corporates and institutions accounted for only 1.1 percent of the total number of folios but they held 40.8 percent of the total net assets.

In terms of sector-wise unit holding pattern, at the end of March 31, 2023, private sector mutual funds held 84.3 percent of total folios and 79.5 percent of the total net assets, making them the dominant players in industry.

The rise in individual investor exposure could also be attributed to higher number of new fund offers (NFOs).

Data shows that the year 2022-23 witnessed an almost two-fold increase in new schemes as 361 new schemes were launched compared to 183 in the previous year. Of the total, 275 were open-ended schemes and 86 close-ended schemes.

How schemes mobilized funds

During 2022-23, both gross fund mobilisation and redemption witnessed upward trend compared to the previous year.

Gross resource mobilisation during the year 2022-23 stood at Rs 105.1 trillion, almost 12.8 percent higher than Rs 93.2 trillion mobilised in previous year.

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Further, redemptions also kept pace with fund mobilisation and showed an increase of 15.0 percent in 2022-23.

Also, net inflows witnessed a sharp decline of 69.1 percent, amounting to Rs 76,225 crore.

In terms of sector-wise share in gross resource mobilisation, share of private sector mutual funds decreased from 77.3 percent in 2021-22 to 73.8 per cent in 2022-23.

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In terms of net fund inflows, public sector mutual funds dominated their private peers with almost 80 percent share in total inflows of funds.
Private sector mutual funds saw their net fund inflow decrease by 89.2 per cent (Rs 15,983 crore) in 2022-23 compared with 2021-22 (Rs 1,48,287 crore).