Equity investors’ base shrinks only by 600,000 in Apr-Sept, compared to 1.7 million last year.
Retail investors accessing equities through mutual funds (MFs) have chosen to stay invested at a time when markets are showing no signs of upward movement.This has brought some relief to fund managers, who had lost 1.7 million investors last year.
Indian benchmark indices have seen an erosion of 15 per cent of value during the April-September period.
| TRUST REGAINED | ||
| Categories | Number of folios | |
| March | September | |
| Income | 45,27,435 | 49,15,688 |
| Equity* | 3,92,90,289 | 3,87,07,397 |
| Balanced | 27,77,217 | 27,72,425 |
| ETFs** | 4,22,801 | 5,54,480 |
| FoFs | 2,15,520 | 2,21,366 |
| Total | 4,72,33,262 | 4,71,71,356 |
| * Includs ELSS ** Includes Gold & Other ETFs Source : Sebi | ||
MF players have successfully applied firm brakes on the pace of losing their equity investor base. In the first half of the current financial year, the number of equity folios (including equity-linked-savings-schemes) have shrunk by less than 600,000. Fund managers see this as a commendable achievement, when seen against 1.7 million folio closures in the same period last year.
Rising investments through the systematic investment plan (SIP) route, which a Sebi official puts at Rs 1,300 crore every month, or a rise of 40 per cent; weak market scenario; and considerable increase in net inflows in equities; have all helped the industry bring the folio closures down.
Last year, during April-September, the industry had lost equity folios at an average of 300,000 a month.
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Ajit Menon, executive vice-president, DSP BlackRock, says: “Normally, when the markets rise, the industry sees investors getting out. And, on the other hand, when markets are weak, investors tend to stay on. I believe, this is a major factor why folios have not shrunk this year.”
Going by the trend seen in the first half of the previous financial year, this holds true. When the domestic benchmark indices inched towards their peak till October before slipping last year, MF players found themselves helpless in applying brakes on the trend of investors moving out. In the next half, when equity markets slipped, pace of folio losses came under control.
According to Dhruva Chatterji, senior analyst at fund tracker MorningStar India, “In such a market, investors cannot book profits on their investments and are staying on. Moreover, of late there is meaningful inflows coming into the fund houses’ equity schemes.”
So far this year, equity-related schemes have seen net inflows of Rs 2,510 crore, against net outflows of Rs 15,361 crore in the period last year. It was only in April this year that the industry witnessed an mass exodus of over 300,000 equity folios only to see situation improve in the coming months.
According to the Securities and Exchange Board of India, the overall folios as on September 30 stood at 47.1 million, a fall of around 62,000. The major addition of folios came in the income schemes at close to 400,000 followed by 130,000 in gold and other Exchange-Traded Funds (ETFs). Rise in folios in income funds and ETFs helped the industry to some extent to compensate the losses it suffered in equity asset class.
During the period, the industry’s assets under management grew marginally to Rs 7.12 lakh crore from Rs 7 lakh crore.