Retail investors prefer MFs over bank deposits: Expert

Geojit Financial Serives (GFS) on Thursday launched an online financial planning platform that enables individuals to manage their finances to achieve short and long-term goals. 

Financial industry veterans HDFC MF MD Milind Barve and GFS Chairman AP Kurien spoke extensively about the emerging financial scenario and the relevance of the newly-launched product. In the last decade or so, the shift in investment preferences are shown by data. 

Household savings rate constituted 25 to 30 per cent (as a percentage of GDP). Physical assets share at 16 to 17 per cent of the household savings and financial assets at 8 to 10 per cent reflect the dramatic change in the investing pattern, Barve said. 

People have started opting for mutual funds (MFs) over bank deposits. Data indicates this trend by the about 18 per cent increase of MF component in the financial assets in the last three years or so, he said, adding the year after year measure of bank deposits growth helped recognise this emerging investment trend.

Five years ago, bank deposits were at 56 per cent while the balance comprised other saving instruments. But in March 2016, the share of bank deposits had declined to 41 per cent whereas MF had shown a rise of 1.5 per cent or thereabouts to touch 8 per cent during the same period. The MF component could probably even be higher. 

Shifting financial assets to other instruments offered a better exposure of returns for investors to the level of risks they were comfortable with, Barve opined.

Given that markets are incredibly dynamic, complex and much more challenging, it is imperative to opt for financial planning as that would be able to ascertain the appetite for risks and accordingly make the allocations. “Investment without advice is fraught with risks,” he said, adding Geojit’s digital tool is a solution ideally suited for retail investors.

Kurien said investment is transforming itself into a disciplined profession and given the plethora of instruments already available in the market, investors have to carefully plan and systematically monitor their current and future investments. That is what the digital platform seeks to offer. 

GFS ED Satish Menon said the programme captures the personal profile and the risk appetite of an investor. Based on the income, goals, risk appetite, the online tool can also suggest ideal investment options. He said the fee for enrolment for online financial planning tool is Rs 999 (an introductory price valid for three months) while the actual fee is fixed at Rs 1,999 with subsequent renewal priced at Rs 999.