66% of Indian urbanites invest in Mutual Funds, says Survey

A recent survey by Numr, a market research company reported that 66% of Indians living in urban cities have invested in or continue to invest in Mutual Funds. Among the cities surveyed, Mumbai reported the highest numbers with 78% of Mumbaikars claiming that they invest in Mutual Funds while only 57% respondents from Chennai reported the same.

Across age groups, people from 36 to 45 years of age formed the majority with 72% whereas only 56% people over 45 claim to have invested in Mutual Funds. Millennials came somewhere in between with 66%.

At the moment, millennials constitute around 47% of India?s working population. According to the Indian Brand Equity Foundation (IBEF), financial institutions like banks, mutual fund and insurance companies are ?are on the cusp of a great opportunity to pool-in ?millennial? savings on one hand and offer insurance and investment options in return.? Clearly, since millennials form a major faction of the total population, they will be the ?primary contributors to economic growth whether as consumers, entrepreneurs or investors? in the coming years.

While it is true that the penetration of Mutual Funds in India is low compared to other nations, it is steading climbing up. Currently, Mutual Funds penetration is 12.8% of total GDP (the world average is 62%). However, this number is almost double of what the figure was merely five years back (6.7% in FY 2012). As evidenced by Numr?s survey, urban Indians have already started investing seriously in Mutual Funds. Therefore, it is reasonable to assume that the rest of the country is also catching up slowly.

A staggering majority of 73% respondents said that they primarily invest in Equity Funds. 23% said that they mostly invest in Debt Funds and 27% chose a mix of both. (Interestingly, Chennai emerged as the majority for Equity Funds with 73% whereas Delhi was the majority for Debt, at 31%).

What companies are Indian urbanites investing in?

Turns out that HDFC, Axis, ICICI Prudential, Aditya Birla Sun, Franklin Templeton, Reliance and DSP BlackRock are the Mutual Fund companies that most of the respondents invest in. The report also measured the Net Promoter Scores of various companies against percentage change in total Assets under Management (AUM) and concluded that NPS has a strong, visible effect on the growth of a Mutual Fund company.

Given below is a graph that indicates that with an increase in the NPS, the growth of the company also increases exponentially.

Axis Mutual Fund has the highest NPS (67.96) among the companies surveyed along with the highest growth (It?s Assets under Management increased by 16% in March, 2019). Similarly, HDFC experienced a 14% increase in its total AUM and has a corresponding NPS of 60.8. According to the survey, Reliance and DSP BlackRock have the lowest NPS, at 51 and 52 and reported a loss of 5% and 9% respectively echoing the notion that NPS has a strong correlation with a company?s financial growth.

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