The capital markets and investment services industry has grown by leaps and bounds in the last 5 years. Even with this impressive growth, we are still in the early stages of finance secularization in the individual spectrum. Decoding investors and their preferences have become table stakes to understanding the key emerging investment trends shaping the world.
Today, retail investors are quickly transitioning from traditional savings instruments like Fixed Deposits, to new-age financial products such as REITs, small cases, NFTs, and digital gold Market-linked instruments like Mutual Funds, have added 70 Lakh investor accounts in the first 5 months of FY22 alone. However, less than 2% of Indians invest in Mutual Funds, posing a significant opportunity for financial companies to make them attractive to the average retail investor. Interestingly, during this same period, the total assets and securities held by retail investors have doubled to an estimated value of INR 100 Lakh Crores. Retail investors are increasingly demonstrating low to medium risk appetite, evidenced by more than 70% of them save up to 30% of their monthly income for investments.
A majority of this change in the retail investor preference is attributable to factors like increased financial literacy, smartphone and Internet penetration, and dismal returns from traditional savings instruments. Further, with the rise in the availability of investment options and the democratization of learning avenues through digital platforms, understanding this shift in investor behavior and patterns has become more critical than ever before. This paves way for Indian equity markets to play an instrumental role in the near future.
This smallcase-Zinnov study titled, “Rise of the Indian Retail Investor,” encapsulates the evolving investment landscape in India, decode the Indian investors’ preferences, and identify key investment trends shaping the ecosystem. Zinnov’s expertise and domain knowledge in the Fintech space enabled us to study the landscape in-depth, and we hope the insights from this report help companies structure their offerings in tune with the asks of the everyday investor.