Edelweiss Mutual Fund (EMF) recently released a report that underlined how social media has spurred the penetration of mutual funds (MF). It revealed significant data about social media consumption and its role in spreading awareness about MFs. Undoubtedly, there is growing interest in MFs from India’s millennials and Gen-Zers.
As per data by the Association of Mutual Funds in India, nearly 50% of individual investors were in the 25-35-year bracket in March 2023 vs just ~35% 10 years ago. These investors are a social-media-friendly group. Consequently, the report added, influencers are the fifth most popular source of information for investment decisions among investors.
EMF’s report further revealed that the increase in India’s social media footprint has coincided with the growth in MF investors. While India’s social media subscribers grew from just over 40 crores in end-2017 to 83+ crore in 2022, SIPs contributed nearly 20% of the total MF AUM vs ~15% in March 2022 – a growth of 500 bps.
Titled ‘Social Media Sahi Hai’, the study traced the evolution of social media, the role of social media in information consumption related to mutual funds from creators and how different participants associated with the industry should embrace social media. The report also highlighted guidelines on how investors can filter the information available through social media.
Radhika Gupta, MD & CEO, Edelweiss MF, said, “We have always been vocal about social media has been influencing the decision-making of investors. The industry has seen growing investments from the younger generation, and they have been consuming the information through social media and content created by creators on these platforms. It’s important and needed that certified practitioners embrace social media and come out to create content dispelling a lot of misinformation out there. Our report throws light on these insights.”
Other key findings of the study;
The report added that the mutual fund industry has continued its surge and crossed the Rs 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, with social media playing a key part.
For instance, the top 15 YouTube channels that spread awareness about investing have nearly 9 lakh subscribers on average, 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, clearly highlighting the large potential base.
Even new-age companies in industries such as beauty, fintech and food delivery are using social media to enhance their presence and connect with consumers. Investors are turning to social media for information that is currently provided by creators and not practitioners.
Leveraging social media
The report added that by 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%)
The industry and its participants can use social media to provide the right set of information to ensure prudent decision-making by investors during various market phases and simultaneously further their brand.
New-age technologies such as artificial intelligence (AI) can be harnessed to cultivate the social media profile of mutual funds effectively. That said, social media conversations need to fall under the good governance ambit to benefit all stakeholders and address key concerns, including investor rights.
Caution
Investors, on their part, need to be cautious and diligently filter the large volume of information. While enhancing their understanding of financial products including mutual funds, investors should also critically evaluate every piece of financial information being fed through social media.
The age of social media is here, and it is high time all participants of the mutual fund industry – asset management companies, distributors and investors – leverage it effectively to extend their reach and realise their goals.
Prudent use of the platform can enhance the penetration of mutual funds and facilitate effective communication with investors. In the milieu, ‘Social Media Sahi Hai’ could well become the new mantra for all stakeholders in the industry.
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