Equity folio closures crossed the 5-lakh-mark in September, reflecting the eagerness on part of investors to exit equity investments in a month the market stayed flat, but was characterised by relentless volatility.
According to the latest data available with Sebi, folio closures numbered 5.07 lakh in September, making it the second-highest monthly closure of folios this year. “The market was quite volatile last month and long-term investors chose to exit during upmoves,” said Jimmy Patel, CEO, Quantum MF. “Some of the money moved into fixed-income products like fixed-maturity plans,” he added.
September also saw sizeable outflows from equity schemes of Rs 2,116 crore. These figures are worrying as equity assets are a lot stickier than debt assets and can generate higher revenues for the fund houses. Fund managers have been advising investors to continue their SIP portfolios even in tough times, but long-term investors who entered the market in 2007 and early 2008 have been particularly keen on exiting during market upmoves.
Last month, the number of folio closures had slid below the 1-lakh-mark for the first time in 19 months to 62,800, sparking hope among industry participants that the worst was over. At the end of September, equity folios accounted for about 75.4% of the industry’s total of 4.13 crore investor folios. AUM of equity schemes stood at R1.4 lakh crore, comprising 18.8% of industry's overall AUM.
About 20 lakh folios have closed in FY14 so far, a number similar to that recorded during the same period last year. For the first nine months of the calendar year, 28.08 lakh equity folios have closed.
Unlike equities, though, about 79,263 folios were created in the debt category in September. Market observers believe some of the equity money found its way into FMPs. Sales of new closed-ended income funds fetched the industry R10,300 crore in September, a bulk of which was collected through FMPs, said experts.