Retail MF folios crash by 35 lakh in H2, says Crisil

The mutual fund industry has witnessed a massive dip of around 35 lakh retail folios during the first six months of the current fiscal, making it the sixth consecutive half-yearly decline, due to volatility in equities market, according to a Crisil report.

"Mutual funds lost a record 8% or nearly 35 lakh retail folios over the past six months ended September. This was the sixth consecutive half-yearly decline in retail folios," the report said.

However, at the overall level, which includes institutional and high networth individuals, total dip in folios was capped at 15 lakh due to gain in the folios held by high networth individual.

By the end of September, total number of folios stood at 4.13 crore as per Amfi data.

Giving the reason for such massive fall in retail folios, the rating agency said that volatility in equity market had prompted such investors to exit.

"The sharp decline in retail folios was mainly in the equity category which was impacted by volatility," the report said.

It also said balanced funds, which is an equity-oriented hybrid category, also witnessed a decline of over 2 lakh retail folios during the reporting period.

Meanwhile, folios held by HNIs (individuals investing Rs 5 lakh or more) rose three times in the first half of this fiscal led by sharp rise in equity folios.

"Out of the 30 lakh HNI folios, 21 lakh were added in the latest half year period," it said.

Indicating the loosing sheen of gold as an asset class, gold ETFs witnessed a fall in retail folios for the first time.

"Retail folio count in the category fell by 5% to 5.24 lakh in the period under review compared with a 16% rise in the preceding six months," it said, adding that fall in gold prices as the reason behind such decline.

However, debt funds continued to attract retail investors with the category witnessing a rise in retail folios since March 2009.

According to Crisil, debt funds added 1.79 lakh folios during the first half of this fiscal against 1.69 lakh added in the previous six months. However, amid rising concerns of exits by retail  investors, the report noted that around 68% of retail equity AUM stayed invested for over two years.

"Out of the Rs 1.06 lakh crore of retail investment in equity-oriented mutual funds, Rs 71,661 crore of investment was held for over 24 months," the report said.

In AUM term, corporates continued to dominate with 49% share, followed by HNIs with 30% share and retail with around 19% share by the end of September quarter.