Majority of investors still consider past performance as key benchmark for investing in mutual funds: Axis Mutual Fund Survey 

As many as 59 per cent investors still consider past performance as one of the key benchmarks for investing in mutual funds, according to Axis Mutual Fund Survey. The survey also highlights that often influenced by market noise, investors tend to redeem their investments even though they are aware of the importance of long-term investing and the power of compounding. According to data by AMFI, 22.2 per cent equity investors stay invested for 12-24 months and in total 48.7 per cent equity investors redeem their portfolio within two years or less.

B. Gopkumar, MD & CEO, Axis AMC, said, “The mutual fund industry is at an interesting inflection point today, underscored by the increasing influx of investors in the category. While we continue to grow as an industry, enabling investors to make informed investment decisions is also our responsibility. To that end, this survey was conducted to get insights on investor’s understanding of risk, and awareness of the tools available to investors to assess risks associated with mutual fund investments. At Axis Mutual Fund, we value our role as responsible investment partners’ to not only help investors navigate their investment journey but also help them understand various aspects of their mutual fund investments, so they are well-equipped to make thought through decisions and fulfil their financial goals.”

Axis Mutual Fund conducted an investor survey to ascertain ‘Risk Comprehension’ amongst Indian investors. The survey received responses from over 1,700 Axis MF investors from across the country. The objective of the survey was to receive insights on investors’ attitude and understanding of risks in mutual fund investing.

Even though 89 per cent investors believe that understanding ‘risk appetite’ plays a role in choosing the right mutual fund, only 27 per cent investors said that they actually took their risk appetite into consideration before investing. In fact, the survey reveals that 53% investors are not very confident of personal risk assessment while choosing a mutual fund. It is imperative to understand that each investor has a different risk appetite based on his/her investment profile, financial goal, and needs. Furthermore, investments are still largely ‘behaviourally’ influenced, making it even more important to shape this attitude into an aware, educated, and well-informed skill set.

Ashish Gupta, CIO, Axis AMC said, “Investing is all about navigating through uncertainties and staying committed to the investment journey. While there has been an increasing influx of investors in the markets today, conversations about ‘risk’ and ‘risk appetite’ are minimal at best. However, on a positive note, the report results highlight that investors want to understand more about the concepts of ‘Riskometer’ and ‘Risk Profiler’.”

Understanding Risk Profiler: Of the 27 per cent respondents who claimed to take risk appetite into account, 64% were not aware of risk profiler as a tool to evaluate risk appetite and of the total survey respondents, only 30% of respondents were aware of Risk Profiler. This indicates that investors know the importance of risk profiling but might not be aware of ‘Risk Profiler’ as a tool for assessing personal risk, leading to a potential mismatch between personal risk and that of the fund. Only 12 per cent of the total respondents who were aware of a ‘Risk Profiler’ claimed that they were either confident or somewhat confident in assessing their risk-taking ability.

Understanding Riskometer: As many as 61 per cent of the respondents were not aware of what risk-o-meter indicates. Only 16 per cent of the total respondents who were aware of a ‘Riskometer’ and that it indicated ‘Fund’ risk, claimed to check the ‘Riskometer’ before making an investment. On a slightly brighter side, 66 per cent investors mentioned that they would like to understand more about the risk-o-meter and its importance in making informed decisions.