According to market regulator Sebi's data on total investor accounts with 44 fund houses, the number of folios fell to around 4.15 crore at the end of July 2013, from 4.28 crore in the last fiscal (2012-13).
Folios are numbers designated to individual investor accounts, although one investor can have multiple folios.
Market participants attributed the sharp fall in number of folios to profit-booking and various merger schemes in the mutual fund industry, among other reasons.
During the April-July period of 2013, the number of investor folios for equity schemes fell by over 14 lakh. The total number of folios in equity funds were 3.17 crore by the end of June as against 3.31 crore by March-end.
The mutual fund industry has been facing consistent equity folio closures in the past few months. Recently, Sebi Chairman U K Sinha had also raised concerns over the continuous decline in folios in recent months.
The decline in equity folios during the April-July period of the year is in line with a decline of 2.5 per cent in the BSE benchmark index Sensex.
According to Sebi data, the total number of folios in debt funds rose by about 2.20 lakh to 64 lakh at the end of July 2013. Besides, exchange traded funds gained over 2,960 folios to 7.42 lakh investor accounts at the end of July this year.
Balanced schemes, which invest in the equity and debt category, shed 88,665 folios to end at 25 lakh at the end of July.
As on July 31, the sector offered a total of 1,172 schemes to investors, of which 345 were equity schemes and 739 were debt-linked schemes.
The mutual fund industry lost more than 36 lakh investors in 2012-13. The last financial year also marked the fourth consecutive year of loss of folios by mutual funds. During the preceding three financial years, the mutual fund industry had lost over 15 lakh new investor accounts.