At 4.6%, MFs post highest rise in retail folio since 2009

Written by fe Bureau | Mumbai | Updated: Oct 30 2014, 09:36am hrs
Mutual funds registered a 4.6% increase in retail folios in the first six months of the current fiscal, marking it the highest rise since March 2009, when the Amfi started declaring half-yearly folio data.

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As per Crisil data, this translates into an increase of 16.6 lakh retail folios against 3.6 crore retail folios at the end of FY14. The rise was led by an addition in equity fund folios. At the end of H1FY15, the industry had 3.80 crore retail folios, almost 96% of the total folio base of 3.95 crore folios, including institutional and high networth individual (HNI) folios. On an aggregate basis, mutual fund folios fell marginally due to a decline in HNI folios.

The analysis showed that of Rs 1.72 lakh crore of retail investment in equity-oriented mutual funds, Rs 1.10 lakh crore continued for over 24 months.

The equity segment, which reported a consistent decline in retail folios since H2FY11 till H2FY14, posted a record addition of 16.89 lakh folios in H1FY15 to 2.90 crore folios. A strong rally in the equity market and the consequent rise in investor interest led to the sharp increase in retail folios. CNX Nifty gained 19% in the six months ended September 2014.

The HNI segment (individuals investing Rs 5 lakh or more) saw folio closure in all mutual fund categories. The segment saw closure of over 16 lakh accounts in H1FY15, a record fall as per the data available since March 2009. The equity fund category saw the biggest fall with closure of 11.34 lakh folios in H1FY15, Crisil said in its report.

Retail folios in the liquid fund category posted a record rise of 42,199 folios to end at 2.41 lakh folios in H1FY15 following an addition of 30,457 folios in the preceding six months. Retail folios in debt funds maintained the uptrend (since March 2009) in H1FY15 as well. The category added 4.29 lakh retail folios over the last six months, the highest since September 2012. About 2.92 lakh folios were added in the preceding six months.

All investor segments (retail, HNIs and institutions) continued to stay away from gilt funds due to flat interest rates amid lack of monetary easing by the Reserve Bank of India (RBI). The categorys folio base slipped 11% to 50,937 accounts, Crisil said.

Gold exchange-traded funds (ETFs) posted their third consecutive half-yearly decline in the overall folio count. The retail segment saw closure of 21,557 folios to end at 4.68 lakh folios in the period under review compared with closure of 35,103 folios in the preceding six months. Domestic gold prices (represented by the Crisil Gold index) fell 5% in the six months ended September 2014.

Tenure-wise analysis of assets under management (AUM) across investor types and categories for the half year ended September 2014 showed that 64% of retail AUM stayed in equity mutual funds for more than two years, higher than 62% seen in the preceding six months. Of the Rs 1.72 lakh crore of retail investments in equity-oriented mutual funds, Rs 1.10 lakh crore was held for over 24 months. About 32% of HNIs, by AUM, stayed invested in equity mutual funds for more than two years, sharply lower than 51% seen in the preceding six months.