Investor accounts or folios of the mutual fund industry declined five per cent year-on-year to 4.4 crore as at September-end 2012.
According to AMFI (Association of Mutual Funds in India) data, folios have come down from 4.7 crore during the period. However, the period between March and September 2012 saw a steeper decline in folios (3.5 per cent) as compared with the first half of the year (1.5 per cent).
On a year-on-year basis, the assets under management of the industry grew 22 per cent to Rs 7.22 lakh crore from Rs 6.42 lakh crore due to increase in institutional flows into debt schemes.
Profit-booking
Profit-booking by retail investors has been the key factor behind the folio count decline, said fund analysts. Folios in the equity-oriented schemes stood at 3.5 crore as on September, down from 3.8 crore in the year-ago period.
Between September 2011 and September 2012, the CNX Nifty, which serves as the benchmark for a majority of the equity-diversified mutual fund schemes, rose 13 per cent. Much of the rise in the benchmark was seen during the last one month when markets rallied on the back of global and domestic reform measures.
“The markets have largely been range-bound through the year. Equity markets have only come up post September 20. Investors have been booking profits since then,” said Hiren Dhakan, Associate Fund Manager, Bonanza Portfolio.
Fund house officials said that the fall in folio count could also be attributed to the long-term systematic investment plans not getting rolled over. Six-month to one-year SIPs were getting rolled over but those for durations beyond that were not, said distributors. Asset base grew mainly due to the increase in flows into the debt fund category. The MF industry’s debt AUM increased by 15 per cent, while the folio count in these schemes grew by 17 per cent to 55 lakh.
Advisors’ suggestion
Portfolio advisors said that they were advising clients to reduce equity exposure and increase allocation in debt funds, especially short-term ones.
“Retail investors increased their presence in debt-oriented mutual funds (including gilt and liquid funds) with the number of retail folios rising 10.5 per cent in the past six months.
“This can be attributed to investors looking at relatively safer investment options post the volatility in the domestic equity markets in 2011. This is also a good sign of penetration of debt mutual funds among retail investors,” said a report by CRISIL.
Folio count in the Gold ETFs category rose about 15 per cent to 4.9 lakh from 4.2 lakh. The number of folios in the exchange-traded funds (other than gold) category increased about one-fourth to 1.5 lakh from 1.2 lakh, said AMFI.