23% and 39% of growth in number of mutual funds folio accounts of institutional investors and high net-worth worth individuals has come to notice, says ET Intelligence Group. Heavy activity was witnessed in the March 2017 quarter, shows the data from the Association of Mutual Funds in India (AMFI). Severe effects of demonetization were seen all over the market, which began in November 2016, where these two entities maintained inflows into mutual funds.
Reflecting the nature of mutual funds flow, following changes were observed in last few months after demonetization:
- Cumulative net inflow in mutual funds in FY17 was Rs 99,775 crore.
- When the demonetization started (November 2016), net inflows in mutual funds were Rs 36,021 crore.
- The inflows in the subsequent three months till February 2017 grew 2.6 times to Rs 95,013 crore.
- Incremental flow in mutual funds with big ticket size of investment from HNIs and institutional investors was witnessed.
Some of the major reasons of sharp jump in mutual funds inflow were as follows:
- As heavy flow of white money made their ways into banks, there were limited attractive investment avenues.
- Effect of demonetization and inflation stole the charm of returns on bank deposits.
- Real estate and gold turned unattractive, as they displayed no sign of price improvement.
Institutional investors and HNIs, who primarily invested in fixed deposits, gold and real estate, starting demonstrating huge inclination towards mutual funds seeking higher returns, which lacked in the most traditional investment avenues. For retail investors, who typically opt for Systematic Investment Plans (SIPs), folio accounts improved by 15% year-on-year. Their average ticket size of investment rose by 24% to Rs 75,801.
Apart from this, there is an increase in number of wealth managers, who are offering mutual fund products to HNIs. The average ticket size of investment by institutional investors grew by 24% to Rs 11.1 crore on a yearon-year comparison in the March quarter. For HNIs, it was Rs 19 lakh compared with Rs 19.6 lakh a year ago; the drop was compensated by high growth in HNIs’ folio accounts.