MFs lose 5.8 lakh equity folios in Apr-September

Written by Chirag Madia | Mumbai | Updated: Oct 26 2011, 11:10am hrs
Weak equity markets and the fear of further economic slowdown following global uncertainty have forced retail investors to redeem equity mutual funds units in the first half of the current financial year. According to data from the Association of Mutual Funds in India (Amfi), over 5.8 lakh folios moved away from the industry during the six month period ending September.

In September, total equity folios stood at over 3.86 crore as against 3.92 crore in March. However, with interest rates remaining higher, demand for debt funds and gold exchange traded funds (ETFs) picked among retail investors. Dhirendra Kumar, CEO of Valueresearch says, Many equity fund investors who came in during the bull run of 2008 have moved out and no new folios were generated following the lack of enthusiasm from distributors.

While equity, gilt and balanced schemes saw a fall in folios, all other categories such as liquid schemes, ETFs other than gold and fund of fund investing overseas saw investors coming in, during the period March to September. In September, total folios for the mutual fund industry stood at over 4.71 crore; a fall of over 62,400 as against March when total folios were approximately 4.72 crore

Vikaas Sachdeva, CEO at Edelweiss MF says, Its a healthy sign that investors have started coming into debt funds. We believe that over a period of time money will eventually flow into equity or balanced schemes.

The Amfi data also showed that most retail investors in equity mutual funds are holding for more than two years. Over 62% of retail investors remained invested in equity funds for over two years during the half year ended September.

A sales head from a leading fund house said, it is very positive for the industry that retail investors are taking a view of over two years while investing in mutual funds. However we are generally asking investors to take view of atleast five years, so that they could be assured of healthy returns.