Mutual funds on the rise: whos investing probably the most?

At a time when overseas traders have been pulling cash out of the Indian inventory market, home traders have stored it afloat with their regular contributions. Data present that this development has endured for a while now. But who’re these home traders, particularly these placing their cash into mutual funds?

Data present that city Indian males proceed to dominate the home investor market. However, in recent times, the share of these from smaller cities and non-metro areas has steadily elevated. Also, one in 4 of those traders is a lady.

Foreign Portfolio Investors are those that put money into the shares and shares of one other nation — on this case, India. On the opposite hand, Domestic Institutional Investors are funding our bodies inside India, resembling mutual funds, insurance coverage firms, banks, and pension funds, that channel cash into the home monetary market. Among them, mutual funds type a significant class, pooling cash from shareholders and investing it throughout totally different securities.

FPI possession in NSE-listed firms has fallen to a 13.5-year low, whereas the share of Domestic Mutual Funds (DMFs) has climbed to a report excessive. Despite the decline, FPIs nonetheless held the next share — 17.3% — in contrast with 10.3% for DMFs. So, whereas self-reliance by means of home traders is on the rise, the position of FPIs stays essential.

DMFs are largely powered by Systematic Investment Plans (SIPs). These plans permit traders to place in a set sum of money at common intervals — generally as little as ₹1,000 each month — with out having to fret about when to enter or exit the market. The variety of new SIP accounts surged from 14.1 million in 2020-21 to 68 million in 2024-25. Over the identical interval, belongings underneath administration (AUM) by means of SIPs grew from ₹4.27 trillion to ₹13.35 trillion.

Consequently, whereas a major share of households nonetheless depends on conventional financial savings instruments resembling financial institution deposits, life insurance coverage funds, and public provident funds, the proportion investing in mutual funds has been steadily rising. The share of mutual funds in households’ gross monetary financial savings grew from 0.9% in 2011–12 to six% in 2022–23.

An RBI examine concluded that entry to the market — measured by the variety of demat accounts — is probably the most influential consider shaping individuals’s willingness to put money into mutual funds. In different phrases, merely having the means to take a position is usually sufficient for individuals to start. Other essential determinants embody low mounted deposit charges and a supportive enterprise surroundings.

The variety of demat accounts throughout India rose by 200% between 2020 and 2024, growing from 3.8 crore to 11.8 crore. Every State/Union Territory recorded a minimum of a 100% soar. In Bihar, the variety of accounts grew by over 400% — from about 9.6 lakh to 50 lakh — whereas in Uttar Pradesh they climbed 348%, from 0.2 crore to 1.3 crore.

Investor participation can also be now not concentrated in metros. In September 2015, greater than 80% of mutual fund AUM got here from simply eight cities — Mumbai, Delhi, Bengaluru, Chennai, Kolkata, Ahmedabad, Pune, and Hyderabad. By March 2025, this share had dropped to 60%.

Also, traders are usually not simply males. Data exhibits that one in 4 traders is a lady. As of FY25, near 25% of particular person traders are girls. This has been the case since a minimum of FY16.

Source: National Stock Exchange’s “India Ownership Tracker”, Reserve Bank of India, the Centre for Monitoring Indian Economy, Ministry of Statisticts and Programme Implememntation

devyanshi.b@thehindu.co.in

vignesh.r@thehindu.co.in