NFO deluge opens mutual fund investor floodgates wide in July, shows data

Investor tide swells by 1.2 million, reaching 48.1 million

The domestic mutual fund (MF) industry saw an unprecedented influx of new investors in July, with a record 1.2 million additions, the highest since December 2021. This pushes the total unique MF investor count to 48.1 million, approaching the 50 million milestone.

In the past two months, the industry has welcomed a remarkable 2.1 million new investors, fuelled by a wave of new fund offerings (NFOs) in popular themes.

According to Swarup Anand Mohanty, vice-chairman and chief executive officer of Mirae Asset Investment Managers (India), the introduction of innovative funds catering to various risk profiles, rising income levels, and the ease of investing through technology have all contributed to the surge in new investors.

“Investors are realising that while there is risk in investing, the greater risk is not investing at all,” he said.

The industry aims to reach 100 million investors and achieve Rs 100 trillion in assets under management before 2030.

Investor additions typically spike during periods of high new fund launches, particularly by larger fund houses in the equity category, due to increased promotion and marketing activities.

In the past two months, NFO collections have been robust. Fourteen launches in the active equity space amassed a net of Rs 28,105 crore during this period.

Experts believe the investor count will continue to rise, given the strong performance track record.

“MFs are gaining acceptance due to their proven ability to deliver inflation-beating returns. According to Computer Age Management Services data, 50 per cent of the unique investors added between 2018-19 and 2022-23 were millennials. This cohort is more risk-savvy and understands the concept of real returns,” said Parth Parekh, head of investor relations at Prudent Corporate Advisory Services.

The total number of unique investors is tracked through permanent account number registrations.

The robust recovery of the domestic equity market after Covid-19 has sparked a major surge in investor count, with considerable growth observed in both MF and direct investing channels.

Remarkably, the National Stock Exchange, India’s largest stock exchange, recently announced that its unique registered investor base has surpassed 100 million. Impressively, the latest 10 million additions occurred within just five months, whereas the first 10 million took 14 years to reach, underscoring the accelerating pace of investor participation.