Millennials & Mutual Funds: A Fond Love Story

Akanksha Maker | May 24, 2023 | Wealth

As per the CAMS (Computer Age Management Services Limited) report on ‘The emerging force of millennial investors is here to stay & grow’, Indian millennials have been increasingly investing in mutual funds in recent years. About 54 per cent of the new investors added between FY19-FY23 in CAMS serviced mutual funds were millennials.

The report claims about 1.57 crore new investors during the five-year period FY19-FY23 entered CAMS serviced Funds. Of these 1.57 crore, 84.8 lakh were millennials with 54  per cent share. Additionally, out of these 84.8 lakh, nearly 26 per cent were women 

The interesting progressive increase of women millennial investors is a positive sign of financial independence and growing confidence of women to choose financial assets led wealth-creation, thus potentially narrowing the gender divide in the traditionally male dominated investment space.

Mutual funds have increased in popularity among the younger generation due to their potential for higher returns compared to traditional savings accounts and fixed deposits. Additionally, millennials are generally more tech-savvy and have easy access to online platforms and mobile apps, making it convenient for them to invest in mutual funds.

“The India story is the envy of the world, a country with the largest population of employed youth. The digital native millennial generation is a massive opportunity to make mutual funds the first choice and the most inclusive investment class. The report highlights millennials’ participation in mutual funds and the opportunity the segment holds,” says Anuj Kumar, Managing Director, CAMS. 

There are several factors contribute to the growing interest of Indian millennials in mutual funds. Here are a few of them: 

Investment awareness: Millennials are more financially literate and actively seek information about investment options. They understand the importance of investing for long-term wealth creation and are willing to explore different avenues.

Digital platforms: FinTech companies and online investment platforms have made it easier for millennials to invest in mutual funds. These platforms provide user-friendly interfaces, educational resources, and easy investment options, making the process more accessible.

SIP (Systematic Investment Plan): The concept of SIP has gained popularity among millennials. SIP allows investors to invest a fixed amount regularly, often monthly, in a mutual fund. This approach helps inculcate a disciplined investment habit and reduces the burden of making lump-sum investments.

Diversification and professional management: Millennials recognise the benefits of diversification and entrusting their investments to professional fund managers. Mutual funds offer the advantage of investing in a diversified portfolio of stocks, bonds, and other securities, which helps reduce risk and optimise returns.

Long-term investment horizon: Millennials have a longer investment horizon compared to older generations, allowing them to ride out market volatility and potentially benefit from compounding returns over time.

It’s important to note that while many Indian millennials are investing in mutual funds, not all of them are. Financial habits vary among individuals, and some may choose alternative investment options or have different priorities when it comes to managing their finances.





Words by Akanksha Maker

Cover Photograph via Getty Images

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