Income category added highest number of new investors
The domestic mutual fund investor base shrank for the third consecutive month in October, largely on the back of redemptions in diversified equity and balanced funds.
In October, new investor folios reduced by 312,609 to 47,882,195 over the previous month, data available on the Securities and Exchange Board of India website indicated.
In September, the total number of folios had fallen by 156,683 compared to a month ago.
The only categories that added investors during the month were income — which added the highest number of new investors — liquid plans, gold exchange traded funds, and equity exchange traded funds.
Equity
Investor base in diversified equity funds shrank on profit-booking. The Bombay Stock Exchange’s Sensex had risen to 17,000 levels last month. During the period under review, 220,647 investors withdrew investments from equity funds compared to the previous month.
Bombay Stock Exchange’s Sensex and National Stock Exchange’s Nifty fell 7.18 per cent and 7.32 per cent, respectively.
Apart from profit-booking, investor sentiment continued to remain low on equity funds due to Sebi’s load structure and commission norms. Equity linked tax savings schemes also registered some redemptions with 14,034 investors exiting the category.
On the other hand, equity exchange traded funds was the only category mong equity funds that added new investors — 1,039 folios — in October.
The interest in gold exchange traded funds was evident as investor base increased by 10,644 despite the rise in gold prices.
Debt
Investors flocked to income funds, especially treasury management schemes, due to comfortable inter-bank liquidity.
Investor folio of income funds grew to 3,124,411 with 32,214 new investors being added to the category. Interest in these schemes renewed because long-term schemes are expected to post low returns over the next one year as many fund managers expect interest rates to harden from April.
Long term gilt funds’ investor base reduced to 27,848 from 26,809 last month.
However, liquid funds did not attract many investors compared to income funds as returns from the former were lower as Sebi mandated them to invest in papers maturing within 90 days.
On the other hand, in September, liquid plans added the highest numbers of folios — 20,685 investors among debt funds.
