MF equity folio addition slows in April-May

First two months of FY17 add 180,000 investors on average, compared to a monthly addition of 360,000 in the previous fiscal

The current financial year has begun on a slower pace for the mutual fund sector as far as addition of investors in the equity segment is concerned.

Compared to the monthly pace of growth in the previous financial year, the first two months of 2016-17 saw new accounts addition reducing to half the earlier rate. In FY16, the addition was 360,000 of equity accounts a month; April-May’s average was 180,000.

Says Sundeep Sikka, chief executive officer of Reliance MF: “These are normally lean months when it comes to investment in MFs; it should not be called a slowdown. The direction is on the upside and investors will come back.”

The past two months also saw the stock markets gaining considerably. After the troublesome initial months of this calendar year, the benchmark indices have substantially moved up. The National Stock Exchange’s Nifty is trading above 8,000; the BSE's Sensex has crossed 27,000. Sector officials deny any link between the upturn in stocks and the lesser number of newer accounts. After March, they say, is when the salaried class of investors make the most of investment for purposes such as tax-saving and their custom takes a back seat for a while.

G Pradeepkumar, chief executive of Union KBC MF, says: “Investors generally take a pause, to come back later. If you look at the past fortnight’s numbers, the momentum has begun. It is picking up and will be normal by the second quarter.”

Since the Narendra Modi government took charge in mid-2014, the Rs 14 lakh MF sector has seen the equity investor base increasing from 29.2 million to 36.4 million. There are nearly 500 equity related schemes for investors and the segment manages assets worth Rs 4 lakh crore.