In the financial year 2021, over 81 lakh investors opened their mutual fund accounts. It’s nearly 23,000 accounts per day or about 1,000 accounts per hour. With the massive addition of MF accounts, the total number of mutual fund investors in the country now stands at 9.78 crore.
The over 81 lakh accounts added in FY21 is much higher than the mutual fund industry adding 72.89 lakh investor accounts in the financial year 2020, according to the data by the Association of Mutual Funds in India. Experts are now hoping that the healthy growth in the mutual fund industry would continue in the ongoing financial year, as markets and economy stabilise.
Corporate earnings gained momentum in the post Covid unlocking era with the optimism fuelled by higher consumption spends in the festive season. Q3FY21 earnings were ahead of estimates as corporates benefited from lower raw materials cost, higher volume growth and leaner cost structure. Going forward, experts expect Nifty earnings to grow at 24% CAGR in FY21E- 23E. This earnings momentum is likely to provide support at lower levels.
“The recent correction of 7-8% in the headline indices as well as broader markets is a normal healthy correction and should not be construed as negative. Investors should use the current fall as a buying opportunity. Multicap funds are better placed to capitalise on the broader recovery, going ahead,” says ICICIDirect.
Investors are increasingly acknowledging the importance of making investments in mutual funds for meeting financial goals both long term and short term.
The mutual fund industry AUM at the end of March 2021 stood at Rs 31.4 lakh crore. The AUM of open ended equity funds is now at Rs 9.79 lakh crore in March 2021, with flows into equity funds witnessing a turnaround with inflows at Rs 9,115 crore in March 2021. Equity funds had seen outflow for the eight consecutive month till February.
The rally in the equity markets has been well diversified with sector rotation in play in last few months. The sectors or segments like infrastructure, PSUs which lagged behind in the early part of the rally, have started to gain traction indicating the healthy trend of sector rotation.
Pharma funds and global funds have underperformed in the last few months after their significant outperformance last year. Midcap and small cap funds remain outperformers as broader markets continue to recover with better growth prospects as economy recovers in the post Covid era.
Equity investors who stuck to their asset allocation plan and those who continued their regular investment through SIP otherwise stand out as winners now as the market recovered from the volatile year of 2020.
The equity market fall in March prompted inflows into equity funds indicating maturity among retail investors. In debt funds, almost all category of funds except liquid/low duration/money market funds witnessed outflow due to financial year-end requirements as rising yields made investors cautious.
The balanced advantage or dynamic asset allocation funds AUM is now above Rs 1 lakh crore. The balanced advantage category is gaining popularity as asset allocation funds at current higher level are attracting higher investor interest.