As the landscape of Indian stock markets evolves, a recent analysis conducted by the online wealth management platform Kuvera sheds light on the changing preferences of new investors. The study indicates a noteworthy surge in the inclination of first-time investors towards index funds, with 15% of those entering the market in 2023 showing a distinct preference for this investment avenue.
Changing Dynamics:
The report from Kuvera highlights a significant shift in investor behavior, marking the highest-ever preference for index funds among those who commenced their investment journey in 2023. This revelation holds particular importance, considering that the share of investors favoring index funds has not reached this level in the past decade, according to the study’s timeline.
“Newer investors on Kuvera show a steadily growing preference for Index funds. For those who started investing in 2023, 15% of funds in the portfolio were index, highest ever,” noted the report.
Historical Perspective:
Comparatively, in 2014, the share of investors opting for index funds was within the 5-7% range, and it gradually increased over the years. The data suggests that this preference was typically pegged in the range of 12-13% until the recent surge witnessed in 2023.
Age and Portfolio Diversity:
An interesting correlation emerges in the study concerning the age of investors and the diversity of their portfolios. The average number of fund schemes in an investor’s portfolio increased with the age bracket. For instance, investors in the 25-30 age bracket had an average of six schemes, which increased to nine for the 36-40 age bracket. Remarkably, the average number of funds reached 10 for the age categories 41-45, 46-50, and 51-55.
Kuvera recommends maintaining an average of eight schemes in a portfolio, emphasizing that “adding more schemes makes tracking, rebalancing, and managing the portfolio harder.”
Top Bought and Sold Mutual Fund Schemes:
The report also provides insights into the mutual fund schemes that gained popularity and those that experienced divestment during the year. The most purchased schemes included Parag Parikh Flexi Cap Growth Direct Plan, UTI Nifty 50 Index Growth Direct Plan, Quant Small Cap Growth Direct Plan, Quant Mid Cap Growth Direct Plan, and Axis Small Cap Growth Direct Plan. Conversely, the most sold schemes comprised Axis Bluechip Growth Direct Plan, Axis Focused 25 Growth Direct Plan, Axis ELSS Tax Saver Growth Direct Plan, ICICI Prudential Technology Growth Direct Plan, and Aditya Birla Sun Life ELSS Tax Saver Growth Direct Plan.
Investment Goals:
The study also delves into the primary goals motivating investors. Buying a home secured the top spot with 24%, followed by retirement planning at 20%, and acquiring a car at 16%. Surprisingly, education emerged as the primary goal for only nine percent of investors.
