India’s mutual fund (MF) sector has in the past financial year recovered a fifth of the equity investors it had lost after the 2008 global finance crisis.
According to statistics from the capital market regulator, Securities and Exchange Board of India, the sector added 2.5 million new equity accounts, taking the total to nearly 31.7 mn. March alone saw half a mn additions. With this, equity MF folios surpassed demat accounts, as the latter saw only 1.5 mn new ones in the year, taking the total to 23 mn.
Between 2008-09 and 2013-14, the sector lost 12 mn equity accounts, bringing the investors’ base closer to the pre-crisis level. However, 2014-15 was a turning point. Sentiment in the stock markets improved with a new government in Delhi under Narendra Modi and investors flocked to open accounts with fund houses. A substantial increase in new fund launches, mostly closed-end ones, with higher commissions attached, acted as a big catalyst to bring investors for three to five years. Gross sales touched a historic high of Rs 1.5 lakh crore, while inflows (net of redemptions) surpassed the previous high of 2007-08 at Rs 71,000 crore.
The participation from investors hailing from beyond the top 15 (B-15) cities was overwhelming. Data from the Association of Mutual Funds in India show accounts from B-15 cities and towns were almost equivalent to the bigger urban peers.
There has also been an increase in the pace of account additions in recent months. For instance, in March alone, the sector saw a fifth of the total increase during the whole of the year. Fund houses tried their best to garner as much of assets as they could, ahead of the implementation of an upfront commission cap on April 1, said observers.
Altogether, gross sales in the equity category was over Rs 17,000 crore in March. Moreover, during the month there were 12 new equity launches gathering assets worth Rs 1,450 crore.
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