Equity mutual funds witnessed an addition of over 12 lakh investor accounts or folios in the first nine months of the current fiscal (2014-15) in view of sharp rally in the stock market.
Folios are numbers designated to individual investor accounts, though one investor can have multiple folios.
According to SEBI data on investor accounts with 45 fund houses, the number of equity folios rose to 3,0,392,991 as of last month-end from 2,91,80,922 for the entire last fiscal ended March 31, 2014, registering a gain of 12,12,069 folios till December — the nine month period of the current fiscal.
The additions came at a time when the market was scaling new highs.
The month of April saw the first rise in more than four years. Prior to that, the equity mutual fund (MF) sector had seen a continuous closure of folios since March 2009 after the market crashed due to the global financial crisis in late 2008. Since March 2009, it has seen a closure of 1.5 crore folios.
The investor base reached its peak of 4.11 crore in March 2009, while it was 3.77 crore in March 2008.
Industry experts said that a strong rally in the equity market and the consequent rise in investors’ interest led to a sharp increase in retail folios.
“Increased participation by retail investors in equities has undoubtedly led to increase in folio numbers. The industry’s focus on investor awareness seems to have contributed to further growth, in terms of new investors coming in,” HSBC Global Asset Management India CEO Puneet Chaddha said.
“The key contributing factors seem to be an uptick in sentiments and expectations of an investor friendly and reform-oriented government delivering on policy changes,” he added.
Echoing a similar view Quantum AMC CEO Jimmy Patel said: “It is the optimism of investors because of which the folios in equity segment have increased.”
The addition in equity folios is in line with BSE’s benchmark Sensex surging by 23 per cent in the first nine months of the current financial year.
Moreover, mutual funds industry reported net inflows of over Rs 50,000 crore in equity funds in the April-December period of the current fiscal (2014-15), which helped the industry grow its folio count.