Mutual funds still playing catch-up with FDs and insurance: YouGov Survey

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Mutual funds come third in the order of investor preference, after FDs and insurance according to the survey

On the one hand, mutual fund assets are expanding, inflows are increasing, SIP (systematic investment plan) volumes are rising, and folios too are indicating an upward trend. But, on the other hand, the findings from a recent survey reveal a different story.

A survey done by YouGov, a global market research and data firm, shows that mutual fund is only the third most popular investment avenue used by people in India. Fixed deposits, where 47 percent of the investors put their money and insurance, at 45 percent, were ahead as the more preferred investments.

YouGov surveyed people to know about their investments and to see where mutual funds stand in their financial ecosystem.

According to the survey findings, at present, around 37 percent of the people interviewed said they are investing in mutual funds and 88 percent agree with the statement – ‘Mutual fund is a good investment tool.

The ‘Mutual Funds Sahi Hai’ campaign of the industry body Association of Mutual Funds in India (AMFI) aims to create awareness among people about mutual funds and the benefits of investing in them.

Deepa Bhatia, General Manager, YouGov India, said, “Although Indian mutual funds have been seeing strong growth in retail investors , there is still ample room for growth. The data seems to suggest that, over time and with enough experience, the confidence and comfort of investing grows.”

After mutual funds, the subsequent three preferred investment choices are gold, provident fund, and equities.

The survey indicated that 31 percent (or nearly one in three) of the people surveyed investing in mutual funds said they invest around 6-10 percent of their salaries in mutual funds.

Millennials take more risks

The survey also indicates that 36 percent have started investing recently, somewhere within the last year (between 1- 12 months ago) and many (33 percent) have been investing for longer and started more than two years ago.

The new investors’ community is dominated by millennials aged between 23- 38 years, while the seasoned investors’ group is largely Generation-X from 40 to 54 years and Baby boomers cohort from 55 to 73 years.

This data was collected online by YouGov profiles from around 1,019 respondents in India in July 2019. The data is representative of the adult online population in the country.

Among equity funds, more than 56 percent of investors prefer investing in small-cap funds, while the older investors have distributed their money fairly across all fund categories, but 49 percent have invested in mid-caps.

“It’s interesting that millennials are inclined to invest in small-cap funds even though their return expectations are lower than investors with more experience. This mismatch shows that fund houses and financial planners need to better understand their customers and educate them, especially the new ones and help them choose products in line with their expectations.” Bhatia said.

According to YouGov, 51 percent of the investors said monthly SIPs are the most preferred route to make investments, followed by lump sum investors, at 25 percent. New investors prefer monthly SIPs more than the older investors (62 percent vs 40 percent).

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