Market Potential for Mutual Funds Among Retail Investors | MBA admission in Bangalore 2022

Posted by Dr. Samiya Mubeen On 11/02/2022 11:17:57

Retail investing had been on the rise even before the pandemic hit the world. But Covid-19 gave just the push required to send young investors all over the world to the financial markets. In the UK and USA, the government stimulus packages put money into the hands of the people who were stuck at home due to the lockdowns with no other way to enhance financial security than try their hand at trading. PGDM course in Bangalore

Of course, retail investors put in much smaller amounts into the markets, as compared to institutional investors. But their sheer numbers in 2020-21 surprisingly moved the markets. Consider the January 2021 flashpoints where GameStop was soaring and the term “meme stock” was coined. Reddit users took on institutional traders, backing GameStop’s stock and sending the share price up more than 1,700%, compared to December. In fact, Credit Suisse estimated that a third of all stock market trading in the US in 2021 is accounted for by retail investors.

 The record run in India’s equity market is finding strong support from retail mutual fund investors, who are pumping more than a billion dollars a month into stock plans. MBA in Hr in Bangalore

Inflows into mutual funds from regular contributions through systematic investment plans, or SIPs, hit an all-time high of 103.5 billion rupees ($1.4 billion) in September, according to data from the Association of Mutual Funds in India.

Asset managers collected 82.8 billion rupees in 13 new funds launched in September as rising stocks boost the appeal of equity investments for individuals versus low-yielding bank deposits. An unprecedented 2.7 million new accounts were registered in September.

The record-high participation via SIPs underscores a “structural trend of savings shifting to equities,” Gaurav Patankar, head of emerging-market equity strategy at Bloomberg Intelligence, wrote in a note. The surge in these flows, along with strong local institutional buying, is helping in “mitigating volatility from foreign outflows,” he wrote. MBA admission 2022 in Bangalore

India’s benchmark NSE Nifty 50 Index has gained nearly 30% this year and is the best performer among major equity markets in the Asia Pacific. Policy rates at a record low and ample liquidity are protecting the downside, while a ramp-up in vaccinations and a revival of consumer demand are improving earnings prospects for companies. A++ Rated MBA college in Bangalore

Retail investors hold 89% of mutual fund assets in the USA, and they rely on these funds to meet their long-term financial objectives, especially building their retirement corpus and education savings. 94% of such households hold mutual fund shares inside employer-sponsored retirement accounts, Individual Retirement Accounts, and other tax-deferred accounts. Survey shows that from 2005 onwards, 68% of individuals have made their first purchase in mutual funds in employee-sponsored retirement plans. 90 mn retail investors have holdings in mutual funds, which implies that 43% of all US households owned mutual funds in 2014.68% of US retail investors hold more than half of their financial assets in mutual funds, with $103,000 being the median value of mutual fund assets. Institutional clients’ share of AUM in the European mutual fund market rose from 69% in 2007 to 74% in 2013. Institutional clients comprise primarily insurance companies (39% of AUM) and pension funds (33% of AUM), and they rely on the expertise of the fund managers to manage the contributions collected from their members. Households contribute a significant share of the institutional client segment through their ownership of unit-linked products offered by insurance companies, and pension schemes offered by both insurers and pension funds. Households are also engaging in higher purchases of mutual funds from 2013 onwards, and these purchases are made either from third-party distributors or through the internet. More than 50% of US mutual fund assets are in equity funds and this is congruent with the long-term investment perspective for the retail investors. The picture is different in the European market where bond assets comprise the single largest holding at 43% of AUM.


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