High networth individuals flee mutual funds, run to direct equities

A major cause of worry for the mutual fund (MF) industry is the contraction seen within the high networth individual (HNI) segment since FY17. 

In the equity category, HNIs have shown a preference for investing directly in equities instead of through mutual funds. One deterrent could be the expense ratios of about 1.7 per cent of AUM. 

 

“With research and market views available in abundance, it is no surprise that they are giving MF schemes a pass. The industry needs to innovate and design tailored solutions to bring HNIs back," said Shishir Mankad, head, financial services, Praxis. 

The retail segment, on the other hand, has been the fastest-growing across product categories since FY17. In debt and liquid funds, institutional investors are still the mainstay, with retail investors preferring bank deposits.