Record sixth consecutive half-yearly fall as investors book profits anticipating volatility
Mutual funds lost 4% or 16 lakh retail folios in the second half of FY14, marking the sixth consecutive half-yearly fall, according to the data released by industry body Amfi. Overall, at the end of H2FY14, the industry had 3.95 crore folios (including institutional and high net worth individual folios) compared with 4.13 crore folios at end of H1FY14.
“The equity category saw the biggest fall in the number of retail folios as investors chose to book profit after the recent surge in the segment and expectations of volatility ahead,” said a Crisil research report. The equity market benchmark CNX Nifty gained 17% in six months ended March 2014, helped by positive domestic and global cues.
After rising almost three times in H1FY14, the number of folios held by high net worth individuals (HNIs) fell 5%, or 1.5 lakh, in the second half of FY14 as the segment chose to book profit. HNIs are those individuals investing R5 lakh or more. The equity and balanced fund categories together lost nearly 1.8 lakh folios, but the overall fall in the segment was offset by an increase in the number of folios in the debt oriented and liquid/money market funds, according to Crisil Research.
Gilt funds lost the steam and the category saw a 10% fall in the overall folio count, the highest since March 2010, due to the on-going uncertainty in the interest rate environment amid high inflation. Gilt funds generally benefit in a falling interest rate scenario as bond prices (NAVs) and interest rates are inversely correlated.
Gold exchange-traded funds posted their second consecutive half-yearly decline in overall folio count. Retail folio count in the category fell nearly 7% to 4.89 lakh compared with a 5% fall in the preceding six months. Volatility in the underlying asset class prompted investors to exit the category. Domestic gold prices represented by the Crisil Gold index fell over 6% in FY14.
Debt funds have been seeing a rise in the investor accounts since March 2009 and H2 FY14 was no different. Debt funds added 2.91 lakh retail folios over the past six months, highest since September 2012; they had added 1.79 lakh folios in six months ended September 2013.
Tenure-wise analysis of assets under management (AUM) across investor types and categories for the half year ended March 2014 showed that about 62% of retail AUMs stayed in equity mutual funds for over two years, which is less then 68% in the preceding six months. Of the R1.22 lakh crore of retail investment in equity-oriented mutual funds, R75,403 crore of investment was held for over 24 months. About 51% of HNIs by AUM stayed invested in equity mutual funds for more than two years.
Corporates continued to dominate mutual fund AUM. They enjoyed 49% share in March 2014, same as in September 2013. HNIs were the second biggest contributor with 29% share followed by retail investors with 19%.
Source: Financial Express
