Summary of this article
80 per cent of digital wealth remains in two products
Average digital investor holds portfolio worth around Rs 10 lakh
Awareness of new products high, adoption remains limited
Around 80 per cent of the money invested through digital platforms has remained concentrated in just two products – mutual funds and stocks, according to a new report by Redseer Strategy Consultants. The report, titled Inside India's Digital Investing Boom, has found that mutual funds and equities continue to dominate retail investors’ portfolios despite the growing availability of newer investment products.
Mutual fund systematic investment plans (SIPs) account for 37 per cent of the digital investable amount, while direct equities make up 32 per cent. Together, they represent nearly 70 per cent of investors’ digital wealth. When lump sum mutual fund investments are included, the share rises to around 80 per cent.
Digital Portfolios Have Expanded
The study indicates that digital investing has grown much in the past few years. The average investor using digital platforms holds a portfolio of about Rs 10 lakh and has invested close to Rs 3 lakh annually.
Around 38 per cent of investors hold digital portfolios worth between Rs 10 lakh and Rs 25 lakh, while 14 per cent hold portfolios in the range of Rs 25 lakh-50 lakh. Another 2 per cent hold portfolios exceeding Rs 50 lakh.
New Products Saw Limited Adoption
Investment activity has also grown, but there is only limited adoption of newer products. So far, 14 per cent of the digital investable amount has been in fixed deposits, and 5 per cent in debt instruments, with derivatives accounting for the remaining 2 per cent. Digital gold, exchange-traded funds (ETFs), initial public offerings (IPOs), and overseas stocks each account for 2 per cent or less of invested money.
The report has also highlighted a gap between awareness and usage of newer financial products. About 65 per cent of investors are aware of loans against securities, but have not used them. Similar figures have been recorded for global stocks at 57 per cent, personal loans at 56 per cent, margin trading facilities at 55 per cent, and ETFs at 50 per cent.
Investors Have Followed Different Paths
Investor behaviour has remained largely conservative. The report has identified three broad investor groups – Guided Savers, Aspiring Investors, and Confident Builders. The average portfolio of Guided Savers is Rs 10 lakh-20 lakh, with investment of around Rs 5 lakh-10 lakh per year. The portfolios of Aspiring Investors range between Rs 4 lakh-8 lakh, with an annual investment of Rs 1 lakh-3 lakh. Confident Builders have portfolios ranging between Rs 15 lakh and Rs 25 lakh and have been investing Rs 8 lakh-10 lakh per year. Investors have remained loyal to their existing platforms; but at the same time, participation in newer products has been low. The report also suggested that the expansion of digital investing could be more about the number of existing investors who embrace the products rather than new investors.
