Mutual Fund investment: SIP or lumpsum? A survey reveals what retail investors prefer

The survey conducted with more than 2,000 investors participating from across the country, shares insights on the usage and attitude of investors towards passive funds in India. The study also throws light on investors’ preference for SIPs over lumpsum investing, an affinity for index funds, and reliance on social media over news outlets in their investment decision-making.

Speaking on the study, Navin Agarwal, MD & CEO, Motilal Oswal Asset Management Company Ltd. said, “The demand for passive investing has grown exponentially over the past few years, which reflects in AUM growth of 8.5x in last 5 years at a CAGR of 54%. Our commitment to innovation and education will continue to support the future of passive funds in India.”

Pratik Oswal, Head of Passive Funds, Motilal Oswal Asset Management Company Ltd said, “Passive funds are widely popular in the U.S. and have over 50% market share. We have started seeing similar trends in India over the last few years as well. With a market share of around 17%, we believe that there is ample runway for passive funds ahead. This survey is a first of its kind in India and provides insights into how investors think about passive funds. It also helps shed some light on the thought process behind investment decisions of Indian investors.”

According to the findings of the survey, 61% of investors have invested in at least 1 passive fund, underscoring the fast-growing adoption of passive funds in India. Revealing the reason investors choose to invest in passive funds, the survey findings point out the fact that 57% of respondents prefer these funds due to their low-cost nature as the biggest reason, followed by 56% of respondents who feel that the simplicity of these funds is what pulls them to invest in them, and more than 54% investors do so for the fact that they tend to deliver market returns.

Key Highlights of the survey

-61% of respondents say they have invested in at least 1 passive fund

-The top 3 reasons for investing in passive funds turned out to be low cost, simplicity, and market returns

-53% of respondents say they increased their allocation to passive funds in the last 12 months

-3 in 4 respondents prefer to invest using SIPs, underscoring the importance of disciplined investing for wealth creation over the long-term

-Around 60% of respondents said that they rely on Social Media for information on markets and investments

-More than 80% of respondents say they plan to hold their investments for more than 3 years

Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

Updated: 09 Aug 2023, 10:27 AM IST