MF equity folio count up by 16 lakh during Apr-Jan

The growth in equity markets has been noticed by retail investors and since May 2014, there has been month-on-month positive net sales in equity mutual funds

Equity mutual funds witnessed an addition of over 16 lakh investor accounts or folios in the first 10 months of the current fiscal (2014-15) in view of a sharp rally in the stock market.

Folios are numbers designated to individual investor accounts, though one investor can have multiple folios.

According to Securities and Exchange Board of India data on investor accounts with 45 fund houses, the number of equity folios rose to 30,799,002 last month, from 29,180,922 for the whole of last fiscal ending (March 31, 2014) - a gain of 16,18,080 folios.

April saw the first rise in more than four years. Prior to that, the equity mutual fund (MF) sector had seen a continuous closure of folios since March 2009 after the market crashed due to the global financial crisis in late 2008. Since March 2009, it has seen a closure of 1.5 crore folios.

The investor base reached its peak of 4.11 crore in March 2009, while it was 3.77 crore in March 2008.

Industry experts said that a strong rally in the equity market and the consequent rise in investors' interest led to a sharp increase in retail folios.

"Since early 2014, equity market sentiment took a turn for the better and we have noticed significant interest from FIIs on the back of expectations from the new government at the Centre. This has led to equity markets adopting a bullish tone," HSBC Global Asset Management India CEO Puneet Chaddha said.

"The growth in equity markets has been noticed by retail investors and since May 2014, we have seen month-on-month positive net sales in equity mutual funds," he added.

According to Chaddha, the participation is well rounded across all investor segments like retail, HNIs and corporates across all the cities in India.

Interestingly, folio count has been increasing especially in the country's smaller towns -- known as beyond-15 cities (B15) with total number of retail folios such cities recently overtaking the number of folios from T-15 (top 15) cities for the first time, he added.

The addition in equity folios is in line with BSE's benchmark Sensex surging by 30 per cent in the ten months of the current financial year.

Moreover, mutual funds industry reported net inflows of nearly Rs 56,000 crore in equity funds in the April-January period, which helped the industry grow its folio count.

Overall, the industry retail folios surged to 4.07 crore at January-end 2015 from 3.95 crore at the end of March.