New investors buying digital gold, direct MFs: Paytm Money

Varun Sridhar, CEO, Paytm Money, the wealth management arm of Paytm, spoke to Money9 on the change in investment trends due to the impact of the Covid-19 pandemic and how youngsters have taken to equity investments.

Edited excerpts:

Q. What are the emerging investment trends you are witnessing on your platform?

 Sridhar: Last eighteen months have changed India and certain trends which have emerged are disruptive in a way. There’s a change in investors moving money from mutual funds to direct equity. Youngsters are increasingly preferring to manage their own investments. A large focus is now being seen on Exchange Traded Funds (ETFs). For retail investors in India, ETF investments account for only 0.3% of the total AUM. Our data shows 45% of our users in direct equity are less than 25 years of age who are looking for options with higher returns. Wealth-tech platforms like us are aiming to bridge the gap by making equity investments more accessible and simple with the help of technology.

Q. Which are the most popular investment products being favoured by Indians?

Sridhar: Investment preferences are changing and this, I believe is not an aberration but a clear trend. Emergence of digital gold is clearly a big indication as people are looking at gold as an investment which is used as a hedge against uncertain times like a pandemic. Mutual funds remain very popular even today but there is a clear shift towards direct mutual funds as investors are beginning to understand why should I give commissions to my distributor when I can invest directly. Investors are also looking at generating alpha over index returns and therefore are getting interested in global equities.

Q. Are global stocks/ETFs being considered seriously by Indian investors? 

Sridhar: FANG+ ETF is becoming very popular. Some of these technology companies like Google, Facebook, Tesla, etc, are transforming the world. Their asset allocation and the wealth they have created is fantastic. Now when we have options in India from many brokers like Mirae, MOSL, Edelweiss, Franklin etc. offering these schemes with lower expense ratios wherein Indian investors can take exposure in global stocks. Also, it is not just the urban rich customers going for such products. We have users from non-metros, also tier 4 or tier 5 also choosing such investment options.