Mutual funds brave rough currents, haul in 800K investors monthly

The mutual fund (MF) industry continues to bring in new investors, even as equity scheme returns take a hit from a sharp market correction.

 

Between November 2024 and January 2025, the industry added 800,000 (0.8 million) new investors each month, pushing the total unique investor count to 53.3 million.

 

While this pace has slowed from the previous six-month average of 1 million new investors per month, the industry remains confident about its long-term expansion.

 

The MF industry tracks unique investors using permanent account numbers registered with MF schemes. 

 

Over the 12 months ending September 2024, MFs added investors at an unprecedented pace, lifting the count from 40 million to 50 million. This influx was driven by a buoyant equity market and a wave of new equity fund launches. The industry now aims to double its investor base to 100 million over the next five years.

 

However, even as new investors come in, existing investment accounts are seeing higher stoppages. In January 2025, systematic investment plan accounts declined for the first time in years, with closures rising sharply. Industry experts link this trend to investors reassessing their positions amid the market downturn and weaker equity MF returns.

 

The MF industry’s ability to keep attracting investors despite market turbulence reflects its resilience. But the next few months will be a true litmus test as the selloff deepens.

 

In February, the Nifty Midcap 100 and Nifty Smallcap 100 tumbled 13 per cent and 11 per cent, respectively — their worst monthly drop since pandemic-hit March 2020. The Nifty also slid 6 per cent, capping its fifth consecutive month of losses — a streak last seen nearly three decades ago.