Debt vs equity vs hybrid funds: How investment preferences change with age in India

The investment habits of Indians have evolved, thanks to increasing financial literacy, fast-paced digitalisation, emergence of fintech platforms and the active role played by distributors, according to a recent report by AMFI and Crisil.

The changing investment habits are reflected in the variation in preferences for different mutual fund categories based on the investor's age.

The report said that investment preferences shift towards more conservative options as investors grow in their age in India.

There is a notable increase in preference for debt funds and hybrid mutual funds among investors aged above 58. In contrast, equity mutual funds are more popular among younger investors aged 25-44 years.

"The data suggests that investment preferences tend to shift towards more conservative options as investors age, with a notable increase in preference for Debt and Hybrid Funds among older investors," the report said.

"Debt Funds appear to be particularly popular among older investors, with 48.9% of investors above 58 years favoring them. On the other hand, Equity Funds have a significant following across the 25-44 and 45-58 age groups, with 30.2% and 30.6% respectively," it added.

Source: AMFI, Crisil Intelligence

Let's look at what the AMFI-Crisil report says about investors' preferences for different mutual fund categories:

Around 48.9% of investors aged above 58 prefer debt funds, followed by people aged 45-58 (30.6%), and those aged 25-44 (15.7%). Only 1.4% of investors in the below 25 age group prefer debt funds.

Around 31.9% investors aged above 58 prefer equity-oriented mutual funds, followed by people aged 45-58 (30.6%), and those aged 25-44 (30.2%).

Around 51.0% of investors aged above 58 prefer hybrid funds, followed by people aged 45-58 (29.1%), and those aged 25-44 (16.1%).

Around 23.8% of investors aged above 58 prefer passive funds, followed by people aged 25-44 (24.3%), and those aged 45-58 (22.3%).