MFs add 1.1 mn investors a/cs in December

The Indian mutual fund industry added over 11 lakh investor accounts in December, taking the tally to over 2.68 crore.

The influx of investors was led by fund of funds and equity-linked savings schemes, data from Securities and Exchange Board of India indicated.

The main reason for addition of investors in fund of funds category was new fund offers. In December, multi-manager fund of funds specialist Optimix, floated Optimix Active Debt Multi-Manager.

The allotment of units of FoFs floated in November "� Optimix Financial Multi-Manager, Optimix Equity Multi-Manager, and ABN Amro Multi-Manager"� was completed in December.

This resulted in rise in investor accounts in FoF category. Tax saving schemes added 1.5 lakh accounts. In December, Lotus India Mutual Fund raised Rs 46 crore from over 22,000 applications.

Apart from new funds, existing schemes also attracted inflows as investors normally rush to make investments in the tax-saving avenues before the financial year-end, mutual fund officials said.

Investments in ELSS funds along with other designated tax-saving instruments qualify for tax deduction of up to Rs 1 lakh under Section 80 C of Income Tax Act, 1961.

The number of investor accounts in diversified equity schemes rose by 8.9 lakh, again led by new scheme floats.

Prudential ICICI Equity and Derivatives Fund mopped up over Rs 2100 crore from 1.5 lakh applications, while Reliance Long-Term Equity Fund raised a similar amount via 5.1 lakh applications. The only category that witnessed loss of investors was gilt fund.

Interestingly, liquid funds posted a rise in investor accounts, despite the 20 per cent erosion in asset base.

During December, liquid funds suffered massive redemption mainly due to the surprise hike in banks' cash reserve rastio.

On December 8, Reserve Bank of India announced a hike in the cash reserve ratio by 50 basis points to 5.5 per cent, which sucked off Rs 13500 crore from the banking system.

The hike was in two equal stages of 25 bps each on December 23 and January 6.

As per the normal trend, liquid funds saw some outflows on account of advance corporate tax payment, which was due by December 15.

Along with this, some redemption was witnessed from select companies that did not wish to disclose their fund investments in October-December financials.

Even income funds added investors on the back of a slew of fixed maturity plan offers, which are in the limelight in a rising interest rate environment because they give indicative returns.

In December, 26 FMPs raised Rs 94.59 crore, while India's first capital protection scheme from Franklin Templeton Mutual Fund raised about Rs 500 crore.