Awareness among people have grown up substantially as far as investing in mutual funds is concerned. Acceptability of mutual funds as an investment class or a product one can look at investing in is going up.
However, there is still a huge potential and the constant endeavour is to reach out to a newer segment of investors. “Total number of mutual fund folios we have at an industry level is only a little about eight crore. If you look at unique PAN investors it is about two crore. So there is a huge potential to target and reach out to a large diaspora of people to look at mutual funds as an investment,” says Manish Mehta, National Head- Sales and Marketing, Kotak Mahindra , AMC.
With gold and real estate not doing well, people are looking at moving money from physical savings to financial savings.
A lot of investors are also finding investing through SIPs a prudent way of investing in the markets. In the last five years, the awareness of SIP among investors has gone up substantially. In spite of the last two years where the market has been a bit volatile, the SIP numbers have continued to be quite encouraging and there has not been a dip, with net flows every month continuing to remain positive.
A lot of AMCs have worked on the concept of educating the masses on SIP and to demystify the myths and concepts regarding SIPs among investors through advertising and investor awareness programs. Initially, people thought that you need to be rich to invest in SIPs, or you need to have a lot of money to invest in SIPs, but that is changing now.
“In 2015, the average minimum holding in an SIP used to be Rs.1,900 and the average holding period of an SIP at the industry level was about 16 months. Today the average has gone up to Rs.3,500 and the average holding period has gone up to roughly some 39 months,” says Mehta.
The selling pitch has also changed now. Earlier it was just a concept and the idea was to have people invest in mutual funds for the first time. Now it does not need to be sold anymore, distributors now ask clients to stay invested in mutual funds at least for a five or 10 year period. The option to stop it is always there, but one should begin with the mindset that it is for the long term.
Websites and apps selling mutual funds have helped to bring in a lot of millennial investors. It has also given breadth to the industry, reaching out to people who were earlier not addressed by the mutual fund industry. The millennial segment is very much aware of what they want to do. They are clear in their mind about their concept of savings. But a lot of them have short term goals. “So investments in SIPs is not all about retirement or getting your child married, you can invest in a liquid fund if you have a short term lifestyle goal, “says Mehta. Mutual funds can thus be used to meet both long and short term goals and investing in the right product is important.