MFs lose 20 lakh retail folios
Mutual funds (MFs) have lost nearly 4.5% or about 20 lakh retail folios in the past six months due to the sharp fall recorded by the equity category. MFs have around 4.3 crore retail folios or investor accounts at the end of March 2013, data with the Association of Mutual Funds in India (AMFI) showed. The decline was led by the equity category, which was impacted by the volatility in the capital market. The benchmark CNX Nifty declined 3.8% and 0.4% respectively in the three months and six months period till March 2013. Folios in equity-oriented schemes dropped 6.7% or a loss of nearly 24 lakh folios to around 3.32 crore at the end of March, AMFI data showed. Despite the fall, a significant proportion of investors have stayed on with equity MFs largely because of the poor returns offered by these schemes in the past few years. In all, 63% of retail investors remained invested for more than two years at the end of March. About 61% of retail investors had kept their money in equity schemes for a similar tenure at the end of September 2012. In the high net-worth individuals (HNI) category, about 49% stayed invested in equity MFs for more than two years. Experts and financial advisors reckon that investors would reap higher profits by remaining invested in equity for the long-term. And data too supports this assessment. The CNX Nifty delivered over 20% annualised returns in the 10-year period ended April 30, 2013 compared to less than 4% annualised returns in the three-year period. The fixed income category however continued to see traction with gilt funds, which invest primarily in government securities, seeing a sharp rise in investor accounts. Folios in gilt funds nearly doubled to over 63,000 in 6 months. The category, which has the smallest base of investors, saw a steep rise in investor accounts due to the fall in interest rates. Gilt funds typically gain when rates decline. Folios in debt-oriented schemes increased 6.3% to 58.6 lakh at the end of March. Corporates continue to be the leading investors in MF schemes. Their share in the assets under management (AUM) stood at 46% share in March 2013. This is however because of their high exposure to fixed income schemes. HNIs with a 28% share were the second biggest contributors to the AUM and were followed by retail investors who had a 23% share.
