Advisors, distributors bring 95% of new millennial investors to MFs

Despite the rise of direct investment platforms, 95 per cent of millennial investors who started mutual fund (MF) investing in the last five financial years (FY) came through distributors or investment advisors, including banks. A report by registrar and transfer agent CAMS shows that investment advisors were the top contributors of new millennial investors -- with 35 per cent share -- followed by individual distributors.

The report also shows that while MFs are fast emerging as the preferred investment option among millennials, their reach is still fairly limited in locations beyond the top 30 cities. In the 2022-23 financial year (FY23), 89 per cent of first-time millennial investors were from the top 30 cities.

One of the reasons for the slower rate of investor addition from areas beyond the top 30 cities (B-30) is due to a difference in the digital landscape, according to the registrar and transfer agent (RTA) that works with ten out of the top 15 fund houses. "The effect of Covid-19 in B-30 locations, where the digital sector is still nascent, has slightly dampened the potential of the non-metro markets," CAMS said. The report is not fully representative of the MF industry as it does not include data from MFs that are not serviced by CAMS.

According to the report, more than half of the new investors that started investing in MFs in the last five years were millennials (born between 1981-1996). 1.57 crore new investors during the five-year period FY19-FY23 entered CAMS serviced MFs. Of these, 84.8 lakh were millennials with 54 per cent share," the RTA noted.

Overall, investors from B-30 areas account for 26 per cent of the total individual assets under management with MFs, shows data from the Association of Mutual Funds in India.