Archit Gupta

Archit Gupta is Founder and CEO of Clear (Formerly Cleartax), an online tax filing platform used by over 1 million companies and individuals. Prior to setting up Clear, he worked at Data Domain Inc which was acquired by EMC2.

More From The Author >>

Investment Trends By Women In Stocks And Mutual Funds

Studies show women are likely to invest in equity for child-based financial goals such as children's education and marriage. Equity investments which can offer inflation-beating returns over time are suitable for long-term financial goals

Indian women have made tremendous progress in a male-dominated society. From banking to politics, they have left their footprint in all spheres of life. However, even working women depend on male family members to make investment decisions. It changed post the lockdown in March 2020 when Indian women from Tier 2 and Tier 3 cities commenced equity investments in a big way. For instance, as per recent data, out of 22 million mutual fund investors serviced by CAMS, 5.9 million, or nearly one-fourth, are women. Let's look at investment trends by women in stocks and mutual funds.

Investment trends by women in stocks and mutual funds

Investment holding patterns of female investors show a preference for pure equity funds over debt or hybrid funds. According to CAMS, a Registrar and Transfer Agent, 76 per cent of female investors prefer equity funds. Moreover, only 6 per cent of female investors prefer non-equity funds and 18  per cent focus on both categories.

In line with trends on other platforms, ClearTax saw significant growth in 2019, with around 24 per cent of new investors being female. Moreover, it jumped to nearly 30 per cent in the calendar year 2020 and showed similar figures for the calendar year 2021.

Demographic data shows younger women participating in the equity markets. For instance, Gen Z and millennials in the age bracket of 20-35 make up around 30 per cent of total female equity investors. Moreover, Indian women are careful investors and select equity funds and stocks after researching.

Studies show women are likely to invest in equity for child-based financial goals such as children's education and marriage. Equity investments which can offer inflation-beating returns over time are suitable for long-term financial goals. Moreover, as many female equity investors are millennials, they have time on their side to achieve these goals.

Another exciting investment trend observed post the 2020 lockdown was the jump in the number of female equity investors from tier 2 and tier 3 cities. Studies show that women from smaller cities such as Nagpur, Kochi, Rourkela, Guntur and Nashik etc., focused on equity investments to achieve their financial goals.

During the lockdown, women from smaller towns and cities learned the ropes of mutual fund investments and stocks. The widespread use of technology spewed several investment apps helping women pick the right stocks and mutual funds after researching. Moreover, many of these new female investors in equity are millennials which will lead to the tremendous growth of the mutual fund industry in India.

Investment Trends by Women: SIP vs Lump Sum

AMFI data shows Indian mutual funds have around 5.28 crore SIP accounts as of March 2022, through which investors invest in mutual fund schemes. Monthly SIP collections hit an all-time high of Rs 12,327.91 crore in March 2022.

However, CAMS data shows gross inflows of Rs 25,000 crore made by female investors through systematic investment plans (SIPs) in 2021 against Rs 1.6 lakh crore in lump sum amounts. Many women investors may prefer lump sum investments in equity funds to reach financial goals sooner. However, it involves timing the stock market, and even market-savvy investors struggle to get it right.

Mutual Funds offer the SIP facility where you invest fixed amounts regularly in mutual fund schemes. One invests at all stock market levels, thereby purchasing more units when the markets are down and lesser units when stock markets rise.

It averages out the purchase price of units called Rupee Cost Averaging without timing the stock market. SIP encourages investors to stay with their equity investments for the long term. Moreover, investors get the Power of Compounding benefit, the return on returns from equity investments.

One must not discontinue SIPs when the stock market crashes. It offers opportunities to purchase units at lower Net Asset Value (NAV) and enhance the Rupee Cost Averaging benefit. Moreover, it eliminates emotional investing and focuses on regular contributions to reach financial goals.

Mutual Fund houses serviced by CAMS received gross inflows of Rs 1.82 lakh crore from female investors in 2021. It shows millennial women have realised the importance of equity investments to achieve vital financial goals. In a nutshell, younger women are investing in equity for the long run for its inflation-beating potential over time.

(The given article is attributed to Archit Gupta, Founder and CEO, Clear and has been exclusively created for BW Disrupt website)

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house

Tags assigned to this article:
Women In Stocks stock market investment mutual funds

Around The World