Retail savings are changing asset class

Reported by: |Updated: August 8, 2018

Physical savings in India declined from 12.4% of the Gross National Disposable Income in 2014-15 to 10.7% in the recent past. What is the reason – FALLING REAL ESTATE PRICES, says a report in Banking Frontiers. Rahul Agarwal, director, Wealth Discovery, says that 2017 mutual fund data indicated that retail investors or individual investors have taken a dominant position in mutual fund investing. MF share has risen from 44.5% at the end of January 2017 to 50.6% at the end of December 2017. Individual investors primarily hold equity-oriented schemes, while institutions hold liquid and debt-oriented schemes. This shift to investing in financial products is perhaps a consequence of low returns on physical assets – it represents a behavioral shift and it’s a welcome change and overall positive for the Indian equity markets.

Agarwal also mentioned that Wealth Discovery witnessed significant volume increase in the activities of its IPO desk this year. Investments in the primary markets through the company would be in the order of several hundred crores, he says, adding IPO commissions form a very small part (<5%) of its overall revenues. “However, good quality IPOs help us in getting new clients and offer opportunities to serve our clients with our other financial product offerings. Some 38 IPO offerings hit the primary markets in 2017, out of which 27 offered positive returns on listing,” he elaborates.