The New Trend: Why More Millennials Are Investing in Mutual Funds

Are millennials the new generation of mutual fund investors? A report by CAMS and CII found that 54% of new investors who started investing in MFs during FY19-23 were millennials. To know more, read this article.

Millennials Investing Mutual Funds
  • Over 54% of new investors in mutual funds during FY19-23 were millennials
  • Simplified KYC and digital access encouraged millennial investments

Are millennials changing the face of the mutual fund industry? A recent report by CAMS reveals that out of the 1.6 crore new investors that invested in mutual funds during the FY19-23 period, a staggering 54% were millennials. That's close to 85 lakh new millennial investors in just five years! Furthermore, those who remained invested during this period saw their assets grow to Rs. 96,000 crores by March 2023. This article will explore what's driving this trend.

Given below are interesting insights from the recent report:

Why did so many millennials invest in the mutual fund industry during 2019-23?

A report by CAMS suggests that the influx of new millennial investors can be attributed to awareness campaigns, favourable market conditions, and digital access. Additionally, simplified KYC, intermediation, and advisory have encouraged investment in mutual funds.

What is the proportion of women investors in new millennial investors?

As the report said, 26% of these new millennials were women.

What type of funds interest millennial investors?

During FY23, 90% of first-time millennial investors chose equity funds, which remained the preferred choice throughout the study period, except for FY20 and FY21. However, it is noteworthy that sectoral or thematic funds had the largest share of investments among new millennial investors.

Also Read: Union Budget 2023 and its offerings for the GenZ and millennials of India

What inspired millennials to invest in mutual funds?

95% of millennial investors prefer advisors or distributors rather than a DIY approach when investing in mutual funds, with 35% choosing SEBI-registered investment advisors and 60% opting for MF distributors and banks, according to a recent report.

What is the proportion of new millennials in the Systematic Investment Plan during 2019-23?

Millennials have made 29% of total Systematic Investment Plan (SIP) investments between FY19-FY23, contributing significantly to the growth of the mutual fund industry.

Also Read: Credit Line: What It Is and Why It Is a Favorite among Millennials Today

Investment preference: Lump sum vs. Systematic Investment Plan

Around 33% of Indian millennials invested in mutual funds through the lump sum route between FY19-FY23, with 44% of them choosing this method in FY21 after the March 2020 market crash. However, the number decreased to 35% in FY22 and 28% in FY23, indicating a trend towards Systematic Investment Plans (SIPs).

Exposure to fund houses

A majority of millennial investors who started investing in mutual funds between FY19-FY23 preferred to stick with their first fund house, with only 3% investing in more than five fund houses, according to a report by Computer Age Management Services (CAMS).

Conclusion

Awareness campaigns, digital access, and simplified KYC encouraged the entry of new millennials into the mutual fund market. About 54% of new investors in the industry from FY19-FY23 were millennials, with equity and sectoral/thematic funds being popular choices.

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