Most retail investors prefer equities over other asset classes to park funds and play in the market only when they have surplus cash, says a survey.
The survey findings indicate that markets watchdog Sebi's investor awareness campaigns have finally begun to bear fruit, and come amidst the recent rally in the markets making Dalal Street the best performing large market this year.
According to the retail investor survey conducted by leading brokerage Geojit Securities, about 83.45 per cent invest directly into equities, while 59.25 per cent do so only when they have surplus money and that too only in equities. Besides, only 20 per cent invest on a monthly basis.
The Kochi-based Geojit conducted the online survey among over three lakh investors recently, after the Sensex crossed the 30,000 mark for the first time.
It can be noted that both the Sensex as well as the Nifty gained close to 18 per cent in 2017, making Dalal Street the best performing market among its global peers.
The second most preferred asset class is mutual funds with 57.21 per cent parking some money in them, while derivatives is the least popular asset class with just 4.76 per cent dabbling in it.
Also, only 14.55 per cent investors engage in day trading. More importantly, 62 per cent investors consider day trading to be the most risky investment approach.
Over 65.5 per cent consider directly investing in equities for better returns, while only for 24 per cent feel mutual funds are better.
Another key finding is that 65 per cent investors wait for the market to go down to enter and a similar per cent also believe in long term investments.
As against this, the long term investors for MFs are around 31.6 per cent.
In a bull market, 61 per cent investors prefer direct equity as the most preferred investment, while only 23 per cent prefer MFs.
Almost 20 per cent investors feel that derivatives are the most riskiest asset class and the majority of the few who trade in derivatives are businessmen or professionals, says the survey.
A little over a quarter who invest on a monthly basis are salaried, businessmen and professionals, it says.
“The key findings point out that investors have become more mature in their investing behaviour and this comes out strongly in their choices,” says the survey.
“Also, the booms and crashes of the past have taught them a good lesson or two. The findings also show that thousands of investor education programmes conducted by Sebi are finally showing results,” it says.
Nearly 62 per cent invest up to 20 per cent of their disposable income in equities, again reiterating the overall findings that the equities remain the most favoured asset class for the retail.
This is, however, surprising because globally, including here, there is no consistent data that proves retail investors gained from investing in equities, as their general tendency is to enter the market amidst boom and exit during distress.