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India's mutual fund sector has seen an addition of nearly 2.5 million new permanent account numbers (PAN) so far this financial year (April-November). This means 2.5 million new individual investors have come to mutual funds in the first eight months of FY16.
This is an achievement for the mutual fund players, that have been struggling to make their products readily acceptable by new investors. Due to the continuous investor awareness programmes across the country and engagement of fund managers with investors and distributors, amid poor show by physical assets such as real estate and gold, mutual funds are finding place in investor's portfolios.
According to top officials in the sector, the total number of PAN attached with the mutual fund sector stands at 17 million as of now — almost half the number of tax payers in the country and around one-10th of the total number of PAN allotted.
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2.5 mn: New investors have boarded mutual funds within eight months 17 mn: Total number of individual investors in mutual funds — almost half the number of taxpayers and around a tenth of the PANs allotted 3.5 mn: Mutual-fund accounts opened in the past eight months 2.7 mn: Accounts opened in equity segment alone in the past eight months |
Rs 13 lakh crore: Value of all assets managed by mutual funds
A Balasubramanian, chief executive of Birla Sun Life Mutual Fund, says, “Such an addition of new investors shows the rising acceptance level of mutual funds among investors. The trend is upward in the past few years. The sector, as a whole, has conducted various awareness programmes and it is nothing but the fruit of mutual fund players' continuous impetus on spreading awareness.”
However, the number of new folio addition during this period is much larger. This is well explained by the assumption of more than one folio attached with the new PAN. This financial year also witnessed an addition of 3.5 million more folios. The equity segment alone has contributed 2.67 million new folios.
Milind Barve, managing director and chief executive of HDFC Mutual Fund, says: “The rise in folio number is higher than the actual number of number of new PAN. It could be because of the fact that existing investors may be opening more accounts with the sector.”
Even if the existing investors are opening more accounts, the figure of 2.5 million new PAN is hard to ignore. If the current number of PAN with the mutual fund sector is to be believed, it is a growth of 17 per cent in the number of individual investors.
Dhirendra Kumar, chief executive of fund tracking firm Value Research, says, “This is a great achievement, if I assume the numbers are correct. It is something to celebrate about. In other words, if industry could add only 100 investors in the past 20 years, nearly a fifth of it was added in a span of few months.”
He adds, “The rising number of PAN in mutual funds is the real yardstick of the sector's development and not the assets. This is what mutual fund as a product was invented for; so that common investors can benefit from India's growth story by investing in stock markets through mutual funds.”
Officials say beyond the top 15 (B-15) towns have played an important role over the past two years. According to them, about 50 per cent of the individual investors are now from smaller cities and towns. It is interesting to note that at the beginning of this year, number of folios from B-15 had surpassed those from the top 15 cities.
Currently, the total asset managed by Indian mutual fund houses is to the tune of Rs 13 lakh crore. Out of this, a little over Rs 4 lakh crore has found its way into the equity segment. The overall number of folios currently stand at 45.2 million, while the equity category has 34.4 million.
