Mutual fund folios rise despite fall in assets

Retail investors move to debt funds, equity folios slip by 150,000.

There is some good news for the mutual fund industry. Despite the sharp drop in average assets under management (AAUM), the number of folios – a parameter for gauging the number of investors – has risen. And retail investors seem to be entering the market through the debt fund route.

In June, the industry’s assets dipped 15.9 per cent to Rs 6.75 lakh crore. This was the sharpest decline in percentage terms since the October 2008 crisis. In absolute numbers, the assets fell by Rs 1.27 lakh crore, the highest ever.
 

GAINING STRENGTH NUMBER OF FOLIOS
Category	May	June	Change
Income	38,65,001	40,55,288	1,90,287
Equity	4,07,45,113	4,05,97,368	-1,47,745
Balanced Funds	28,17,984	28,04,547	-13,437
ETFs	2,17,960	2,17,735	-225
Fund of Funds	2,73,843	2,66,313	-7,530

The reason: Companies and high net worth individuals pulled out money to pay advance tax. Also, banks withdrew the money parked with mutual funds to fund 3G and BWA (broadband wireless access) requirements.

Despite this fall, the number of folios rose marginally by 21,350, according to data from the Association of Mutual Funds in India (Amfi). Quite a feat, if one considers that in the previous six months (between November to May-end), the number of folios rose a mere 49,153.

UTI Mutual Fund, the country’s oldest fund house and the fourth-largest in terms of assets, crossed the 10-million mark. It also added the largest number of folios during the period – almost 1.2 lakh.

Reliance Mutual Fund was the biggest loser among the top five funds. The number of folios for the country’s largest fund house (assets of over 1 lakh crore) fell by 28,324.

The rise in the number of folios was mainly due to the fact that investors shifted from equities to debt funds. The number of folios in debt funds rose by 190,000. This sharp rise offset the fall in all other categories – equities (147,000), balanced (13,437), exchange-traded funds (225) and fund of funds (7,530).

Fund houses said there was increased participation from retail investors during the month. Jaideep Bhattacharya, chief marketing officer, UTI Mutual Fund, said, “We observed a shift from equity schemes to debt schemes. A majority of our folios have come from retail investors who are investing in monthly income plans because of the safety they provide.”Investments have also taken place in short-term and fixed maturity plans. R S Srinivas Jain, chief marketing officer, SBI Mutual Fund, said investors were also looking at short-term funds.

However, the income fund category witnessed a net outflow of 1.34 lakh crore. Liquid and money market funds’ net collections were Rs 17,029 crore. But the run on equities continued. In terms of assets, there was a net fall by Rs 1,447 crore.

The collections also took place from both metros and non-metros. “There was action in other markets as well. Investors from non-metros in the came in a good way,” added UTI’s Bhattacharya.