The recent rally in the market has brought cheer to the MF industry, with over 3 lakh folios getting added in the equity segment in April. This is the first time in over four years that the segment has seen monthly folio creation.
According to Sebi data, April saw an addition of 3.85 lakh folios compared with 3.65 lakh folio closures in March.
According to market participants, the recent rally has brought a sense of optimism among investors. ?Investors who were underweight on equities, are now upbeat and are re-balancing portfolios,? said Arvind Sethi, MD & CEO, Tata Asset Management. ?Investors who were talking about returning to equities 4-5 months ago, have now started investing,? said Puneet Chaddha, CEO, HSBC Asset Management.
At the end of April, equity folios accounted for 75.4% of the industry?s total 3.92-crore investor folios. The percentage stood at 86.2% March 2008 end. Assets under management (AUM) of equity schemes stood at R1.66 lakh crore, comprising 18% of industry?s overall AUM of R9.45 lakh crore.
Folio closures have been a regular feature since FY10. Financial years 2004-05 to 2008-09 saw net creation of folios, with 34,000 folio creation a day in FY08, the most in any fiscal. Over 1 crore folios closed in last four-and-a-half years. FY14 saw 39.93 lakh folios getting extinguished; 44.73 lakh folios closed in the previous fiscal.
Folio closures are worrying as equity assets are stickier than debt and can generate higher revenues for fund houses. Fund managers have been advising investors to continue their SIP portfolios, but those investors who entered the market in 2007 and early 2008 have been particularly keen on exiting during market upmoves.
