The mutual fund industry saw a sharp increase in new investors, starting from financial year 2020 (FY20). While there has been a big Gen Z wave, the millennials contributed the most to it. Millennials, also known as Gen “Y” are the ones born between 1981-1996.

While 84.8 lakh new millennials joined the mutual fund community, 1.54 crore Systematic Investment Plan (SIP) registrations were from this age group, according to a report by CAMS.

Around 1.03 lakh crore of gross inflows and asset under management (AUM) of Rs 96.425 crore were registered. On top of these, 26 percent of these new millennials were women, the report said.

Between FY19 –FY23, 1.57 crore new investors joined the mutual fund industry and 54 percent of them were millennials. Of the total SIPs which stood at 5.34 crore, 29 percent contribution came in from millennials.

Millennials growth in last 5 year

There has been a big influx of investors in the mutual fund industry due to pandemic. FY19 saw addition of 29 lakh, which fell to 21.2 lakh in FY20. FY21 was at similar levels. FY22 saw a big jump at 48 lakh, while FY23 continued with additional investors despite the market volatility.

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Millennials continued to be the bigger contributors, ranging anywhere between 51 percent to as high as 57 percent in FY20. Their share peaked to 57 percent in FY20.

Even among the millennials, the ones born from 1991 to 1996 have steadily increased over the five-year period. Out of all the millennials who have entered the MF industry, 50 percent are born between 1991-96, while 30 percent are born between 1986-1990 and the rest in earlier years.

The choice of making the first investment in equity funds has heightened in FY22 and FY23, even though market rally peaked in FY21. So, equity continued to be the flavor with 90 percent share in FY23, followed by debt at 3 percent as a category and other schemes at 6 percent.

If we map the preference for equity funds, it has seen a sharp increase from FY21 to FY23. Though the pandemic period could have kept them cautious, the record performance of the market in FY21 may have made the millennials more interested in FY22 and FY23.

A look at the schemes

Millennial investors preferred the thematic funds the most recently. Preference started with large cap funds in FY19 but that share came off to 7 percent vs 20 percent. Flexi cap funds increased from 7 percent to 21 percent. Small cap funds, flexi cap funds and ELSS also found interest in the millennials.

Most of the millennials, preferred the SIP route. The numbers stood at 73 percent in FY19 which fell in FY20 and FY21 as markets saw more inflows via lumpsum investments. Notably, this was the time when markets were doing well. This increased again to 72 percent in FY23 as investors looked at steady investments spread over longer periods due to volatility.

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The maximum number of millennials entered at lower slabs of less than Rs 1,000 and between Rs 1,000-Rs 5,000. This is understandable but 22 percent of the total investors invested more than Rs 2,000 in the SIP route. While one might think that DIY investing is the new trend, 95 percent of millennial investors did this via distributors or agents.

Redemptions

While there have been account additions and investments, there have been huge redemptions has well. Out of the 1.57 crore SIP registrations, 57 lakh have been cancelled, which is around 37 percent cancellations.

Around 17.6 lakh investors made full redemptions, while 68 percent of them made it with gains and 32 percent made losses on their investments.

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(Edited by : Anshul)

First Published:May 5, 2023 12:44 PM IST