Context:
Household investors are increasingly adopting mutual funds (MFs), investing more via systematic investment plans (SIPs) in a disciplined, staggered manner. Investors are holding MF portfolios for longer durations, supporting wealth creation through compounding and reduced risk.
Investment Trends
- Preference for Equity Funds: Majority of investors focus on equity funds and hybrid schemes (combining income and equity).
- Systematic Investment Plans (SIPs):
- SIP accounts rose to 81.1 million by March 2025, up from 63.8 million in April 2024.
- SIP inflows increased to â‚ą2.9 trillion, up from â‚ą2 trillion the previous year.
- Longer-term SIPs gaining traction: 33% of regular plan SIP assets and 19% of direct plan SIP assets are held by accounts over five years old.
- Over 60% of SIPs are held by accounts more than two years old, up significantly from five years ago.
- Passive Index Funds: Recorded a massive 278% year-on-year inflow growth to â‚ą59,306 crore in FY 2024-25.
Economic and Market Implications
- Capital Access for New Businesses: Increased equity investments improve capital availability, fostering entrepreneurship and business growth.
- Risk Mitigation: Professional fund management and diversified portfolios help reduce the risk of capital erosion.
- Wealth Creation: Equity assets’ long-term returns enable substantial household wealth accumulation.
BS
