In the BSE Sensex’s recent conquest of the 30,000-point milestone, retail investors are demonstrating behaviour that mutual funds have been seeking for a long time: stability through markets good and bad. An analysis of assets under management (AUMs) held by retail investors in equity funds since 2009—when the Sensex hit 10,000—shows a departure from the traditional retail narrative of trying to time the market. Instead, they are investing in greater numbers, especially through systematic investment plans (SIPs), the antidote to the market-timing habit.
Retail AUMs in equity funds
Between September 2014 and March 2017, when the Sensex gained 11%, folios (mutual fund accounts) of individual investors expanded 35% and equity AUMs 76%. Even when the Sensex fell twice (13% and 8%), both metrics kept gaining.
Since a rising market lifts asset values, more than AUMs, a better metric of new investments is number of folios. And since September 2014, retail folios have risen consistently, even in a choppy market.
Investments via equity SIPs
As of March 2017, there were 13.5 million SIP accounts. In 2016-17, the industry added an average of 0.62 million SIP accounts per month and total monthly contributions increased by 39%.