Mutual funds' equity investor base at record high

It took nearly 8 yrs to surpass previous high of 41.13 mn equity folios, touched in March 2009

The number of investors in the country's Rs 19-lakh crore mutual fund (MF) sector has climbed to an all-time high.

At the end of last month, the number of equity MF folios was 42.17 million; total folio count was 57.19 mn. Both are a record. It took the sector nearly eight years to surpass the previous high of 41.13 mn equity folios, touched in March 2009. The previous best count for total folios was 48.17 mn in March 2010.

After the global financial crisis, the equity investor base had shrunk by nearly 30 per cent, to 29.18 mn. In the past three years, equity folios have seen annual growth of 45 per cent, with the rally in domestic stocks and consistent inflow into equity schemes.

Interestingly, MF equity folios are now 50 per cent more than the total of dematerialised accounts, of 28 mn. In other words, many more investors are now accessing the capital markets through the MF route than by direct equity investing.

In the past three years, equity assets under management (AUM) have increased three-fold, from Rs 2 lakh crore to Rs 6 lakh crore. Overall AUM has nearly doubled, from Rs 10 lakh crore to Rs 19 lakh crore.

In the past 12 months, MFs have got a net inflow of Rs 83,469 crore, a monthly average of nearly Rs 7,000 crore.

Motilal Oswal, head of Motilal Oswal Financial Services, says the recent flows have been unprecedented and an equity investment cult is developing rapidly. The increasing popularity of systematic investment plans (SIPs) are helping, say experts.

Sector officials say investor awareness campaigns have borne fruit. "The industry's consistent approach to spread awareness about mutual funds and SIPs, in particular, have helped the sector bring in more investors from across the country," says Sundeep Sikka, chief executive officer at Reliance Nippon MF.