Chart of the week: Rising socialization of mutual funds

3 Apr 2024 , 11:49 AM

The mutual fund industry has continued its surge and crossed the ₹50 Lakh Crore mark as households in India keenly tap new opportunities to invest in the capital market. The onset of social media and wider dissemination of financial information through digital media seem to have played a significant role in shaping the investment decisions of investors across the country, believes the team at Edelweiss Asset Management.

For instance, the top 15 YouTube channels that spread awareness about investing have nearly 9 lakh subscribers on average (Source: Rise of the finfluencers – Business Today), indicating the growing reach of financial influencers. Similarly, the average reach of Instagram financial influencers (finfluencers) was more than 10 lakh subscribers, with a minimum of 5+ lakh subscribers and a maximum of 40+ lakh (Source: The Good Creator), clearly highlighting the large potential base.

Investors are turning to social media for information that is currently provided by creators and not practitioners. Taking a leaf out the initiatives of new-age companies, the mutual fund industry and distributors can leverage social media platforms to increase their penetration in the country, especially among the millennial and Gen Z population, which is emerging as the largest investor base (~50%, Source: AMFI, Edelweiss Mutual Fund). New-age technologies such as artificial intelligence (AI) can be harnessed to cultivate the social media profile of mutual funds effectively.

Growth of MF folios versus internet and social media (2018-2023)