The mutual fund industry lost a record 8% or nearly 35 lakh retail folios in the first half of 2013-14, the sixth consecutive half-yearly decline in retail folios, latest Amfi data show. The industry currently has 4.13-crore folios.
Retail folios fell by 34.42 lakh in the six months to September 2013 over the previous six months. “The sharp decline in retail folios was mainly in the equity-oriented category which has been affected by the ongoing volatility in the segment. Macroeconomic weakness in the domestic market, coupled with some mixed cues from the global market, led to the decline in the local market,” said a report by Crisil research.
The BSE Sensex rose 2.9% between April and September but saw a considerable volatility in the period.
Corporates continued to contribute the most to the MF AUM, with a 49% share as of September 2013, up from 46% in March 2013. HNIs were the second biggest contributor with 30% share (28% in March 2013) followed by retail investors with 19% share (23% in March 2013).
Debt funds continued to attract investors with the category seeing an additional 3.47 lakh folios getting created. Retail debt folios rose by 1.78 lakh in H1FY14 compared with a rise of 1.69 lakh folios in the six months to March 2013.
Gold exchange-traded funds (ETFs) saw a decline in their folio count for the first time. Retail folio count in the category fell 5% to 5.24 lakh in the period under review compared with a 16% rise in the preceding six months. “Investors closed their positions in the category due to volatility in the underlying asset class as domestic gold prices as represented by the Crisil Gold index fell by over 2% in the six months to September 2013,” said Crisil Research report.
Folios held by high net worth individuals (HNIs) — defined as individuals investing R5 lakh or more — rose three times in the first half of the current financial year led by a sharp rise in equity folios. Of the 30 lakh HNI folios, about 21 lakh were added in the latest half-year period. The equity segment added over 14-lakh HNI folios, while balanced funds and debt-oriented funds added 3.45 lakh and 2.72 lakh HNI folios in past six months. In AUM terms, HNI portfolio in equity-oriented funds rose 30%; in balanced funds, it rose around 14% and in debt-oriented funds by 8%. The biggest gain in HNI portfolio in AUM terms was in liquid funds, which rose 106% to nearly R12,000 crore.
About 68% of the retail AUM stayed in the equity mutual funds for more than two years, higher than 63% seen in the preceding six months. About 59% of HNI AUM stayed invested in equity mutual funds for more than two years.