More retail investors look at non-equity MF schemes

Retail folios dip but those in debt-oriented funds rise 18%, ETFs 65%, in first half.

Domestic retail investors seem to be changing their investment strategy in mutual funds. The equity segment is no longer the only favourite for investors. Money market schemes, debt funds and gold exchange traded funds (ETFs), among other asset classes, are also catching their fancy.

Though the first half of the current financial year was marked by a sharp decline in retail equity folios, this loss was largely compensated, as investments went ahead in other asset classes.

Data with the Association of Mutual Funds in India for April to September showed the fund market lost close to 1.7 million equity folios, or four per cent, to 38.62 million from 40.29 mn. However, the number of retail folios in debt-oriented funds saw a rise of 17.6 per cent, at 3.75 mn as on September 30, compared with 3.19 mn at the start of the current financial year.

In ETFs (including gold ETFs), the number of retail folios rose 65 per cent in the first half .
 

RETAIL FOLIOS’ GROWTH IN MFS
Category	31-Mar	30-Sep	Growth (%)
Liquid/money & mkt	1,99,334	2,14,204	7.46
Debt-oriented	31,94,220	37,57,125	17.62
Balanced funds	27,72,800	27,737,35	0.03
Gold ETFs	1,42,270	2,35,218	65.33
Other ETFs	31,844	52,397	64.54
GILT funds	26,674	24,685	-7.46
Equity-oriented	4,02,93,410	3,86,23,365	-4.14
Source : Amfi                                                          figures in Rs  crore

Sundeep Sikka, chief executive officer at the country’s largest fund house, Reliance Mutual Fund, says, “One tends to normally attach mutual fund investment with the stock markets, which is not true. The debt segment is also attracting investors and we are hopeful this asset class, too, will find takers among retail investors.”

According to Jaideep Bhattacharya, chief marketing officer at UTI Mutual Fund, “Monthly investment plans have shown a good inflow.”

Among all domestic household savings, the debt segment contributes close to 80 per cent in banks’ fixed deposits, post offices schemes and other debt instruments. Mutual fund debt schemes can give better returns, say fund managers.