Equity MFs pull in nearly 12,000 investors a day in FY16

In the first half of the current fiscal, fund industry added a whopping 2.15 million new folios

A little less than 12,000 investors have opened equity accounts per day so far this financial year. This marks the fastest pace of equity folio openings since the bull run of 2007-08.

Put together, in the first half of the current financial year, the fund sector added 2.15 million folios, a little less than the whole of last year's. With this, the overall equity investors' base has increased to 33.8 million against 31.7 million at the beginning of the year. In FY15, the sector added 2.5 million folios in the equity segment.

Despite a sharp fall in key benchmark indices against their 2015 peaks, and a spike in volatility, the pace of investor additions has largely not been hit. Rather, it has intensified.

In August and September, the fund sector added a million equity accounts, despite a sharp correction in the markets.

"The trend is changing. As the investors are maturing and literacy increasing, inflows are coming even when the markets are trading down. From B-15 cities, too, we are seeing a robust number of new investors coming to our sector, which is a good sign," says C V R Rajendran, chief executive of Association of Mutual Funds in India (Amfi).

 

 

This year's addition is still low compared to that seen during 2005-2008. But it is clearly a reversal in trend from the continuous closures of investors' accounts from 2009 to 2013.

Between FY10 and FY14, the sector lost 12 million equity folios.

Sundeep Sikka, chief executive, Reliance Mutual Fund, says, "The number of SIPs (systematic investment plans) are on the rise and the pick-up is quite visible. We, as a sector, have been pushing for systematic investments and it is showing good growth. The average size of SIP has also increased."

As on September 30, the total equity assets of the sector (including equity-linked saving schemes or ELSS) stood at Rs 3.86 lakh crore. Already, gross equity sales, net inflows, and fund manager' net investment in stocks are making records.

Milind Barve, managing director of HDFC Mutual Fund, said, "The good part about the recent trend is those who had been buying into gold and other physical assets for many years are now interested in buying financial assets such as equities. We are committed to the approach of introducing investors to mutual funds through SIPs."

Further, with deposit rates at around 7.5 per cent against as high as 8.75 to nine per cent a year ago, fixed-deposit savings may find way their way into funds.

Rajendran said, "Our assets are today hardly a tenth of the banking assets. With the surplus income available in the market today and increasing middle-class families, the saving potential is increasing. When interest rates are going down, the deposit rates will go down much faster. Certainly, people will look for alternative asset classes like mutual funds."

Rs 77,000-cr outflow in Sep

Investors pulled out over Rs 77,000 crore from mutual fund schemes in September, making it the highest outflow in six months, with liquid and money markets contributing the most to the outflow, the Press Trust of India reported.

This comes on the top of a net outflow of Rs 46,750 crore from mutual funds in August.

According to data from Amfi, investors withdrew a net Rs 77,142 crore in MF schemes last month.

This was the highest outflow in a single month since March, when the industry had seen a withdrawal to the tune of Rs 1,09,897 crore.