Dip in MF equity assets with holding over two years

Experts said HNIs were taking money after the sharp rally over the past two years

Equity mutual fund (MF) assets of a holding period of two years or more saw a decline in the first quarter of this financial year.

Experts said investors, especially high net worth individuals (HNIs), were taking money after the sharp rally over the past two years.

In March, nearly 44 per cent of the sector’s equity assets had stayed invested for more than two years. This slipped to 41 per cent in June, according to statistics from the Association of Mutual Funds in India (Amfi).

Aashish Somaiyaa, chief executive officer (CEO) of Motilal Oswal AMC, says: “There could be a possibility of profit booking by investors after March, who came early in the market before the current rally began.”

Says the sales head of a large fund house, “The fall of three per cent is too insignificant for the equity segment, which has grown so fast in recent times. There have been redemptions, no doubt, by some large investors, reducing the holding period of larger assets.”  Gross redemptions from equity after March till June were Rs 14,500 crore.

Strong inflows in the equity segment over the past year, resulting in a steep rise in assets under management (AUM), are another reason why the proportion has gone down. “It will be wrong to infer that investors' holding period is on the decline. Rather, one should look at the rise in assets which has dramatically changed the arithmetic, squeezing down the percentage,” says the chief marketing officer of one of the largest fund houses.

The net inflow data suggest equity got Rs 33,000 crore of investor money during April-June. This pushed the equity AUM to Rs 3.72 lakh crore in June from Rs 3.45 lakh crore in March. “Such a strong inflow in a single quarter was not the case till March and that's why the number got skewed towards the lower side,” he added.

A little over 40 fund houses manage an asset size of Rs 13 lakh crore.