Millennials now account of 47% of New Mutual Fund Investment
Hassel free Investment and comparative higher returns than fixed deposits has made millennials look for Mutual Funds as a safe investment option in the times of growing stock market and declining savings interest rates. As per the data by Computer Age Management Services (Cams), an agency responsible for servicing Mutual Funds and services 68% of MFs in India. As per the data released by CAMS millennials accounted for 47% of new Mutual Fund investment in FY 18-19 period, of the 3.6 Mn new MF investors onboarded by the organization 1.7Mn were millennials (a demographic segment comprising of people in the age group of 20 and 35 years.
CAMS data also revealed a new trend of rise in number of women investors amongst millennial age group. Millennial Women accounted for 24% of 1.7Mn investors which invested in several MF schemes, this is a remarkable change investment trend as women are traditionally associated with investments in real estate and gold for long-term basis.
In past two decades India’s economy has transitioned with increase in academic levels of both men and women and also subsequent increased in participation of women in workforce, India’s transition to service economy has also brought about change with more qualified women participating in service economy. The percentage of urban women with regular and salaried job increased in past two decades by whopping 15percentage points to 43% in 2012 from 28% in 1993, and further till 2018. This shift in working women with regular jobs brought inherent change in the consumption and saving pattern of urban women in India.
As more and more women join workforce the demand for simpler and yet diversified investment avenue is increasing, not just women but also millennial men are drawn towards Systematic Investment Plans and Equity Linked Saving Schemes (ELSS) which provide tax benefits and also good prospect of making higher returns in long-term.
Consistent decline in Savings interest rate in last decade and India’s strong domestic market driven economy in face of stagnant global economy has not only made capital market better performer in past eight years but has also brought volatility due to sudden influx and exodus of foreign capital; millennials have become smart with their investment choice by becoming indirect participant in the market and personally insulating themselves from the market volatility.
Another factor that is driving the need for better investments amongst millennials is lifestyle aspiration. Millennial women now have similar aspirations as their male counterparts and their desire for financial independence has led to shift in the investment pattern and diversion from traditional fixed deposit methodology. Millennials also aspire for a lifestyle full of varied experiences and travel and they focus on investments which are less volatile and can provide income on sustained levels in long-term. Mutual Funds are perfect fit with higher returns on long-term investment.