Equity MFs favoured over debt funds despite negative stock mkt returns

The number debt scheme folios down 6% in 12 months to September 2022, equity MF folios have surged 21%; Passive schemes, which includes ETFs and index funds, have grown the fastest at 56%

Despite negative returns generated by the stock markets over the past one year, investors have continued to favour equity over debt mutual funds (MFs). The number of folios for debt schemes has declined 6 per cent in the 12-month period ended September 2022. On the other hand, equity scheme folios have surged 21 per cent. Passive schemes, which includes exchange traded funds (ETFs) and index funds, have grown the fastest at 56 per cent.

Overall, MFs have added 24 million new folios net in the past one year with total unique investor count surging 31 per cent to 36 million, shows an analysis of data from the Association of Mutual Funds in India (Amfi).

MF folios are essentially investors accounts. One investor, however, can have a number of folios.

The benchmark Sensex and the Nifty, logged their all-time highs on October 18, 2021. Since then, they have been on a roller coaster ride. Debt schemes too have had a poor show amid rising bond yields and hawkish pivot by central banks.

Within the active equity segment, multicap and smallcap funds added folios at the highest pace. They registered a net folio growth of 90 per cent and 39 per cent, respectively, shows Amfi data.  Overall, equity-linked savings scheme (ELSS) is the most popular mutual fund offering.  As of September-end 2022, the fund category had a total folio count of 14 million, up 10 per cent in the last one year. Largecap funds, sectoral funds and flexicap funds are other most popular categories.

The data also shows that equity schemes have 67 per cent share in the total open-ended folio count, followed by passive funds.