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26 Apr 2012 05:25 AM
Debt funds gain even as 15.76 lakh retail equity folios close in FY 2012  
Ravi Samalad
 
Folios of retail investors in debt funds have gone up by 5.71 lakh in the previous fiscal. The industry saw Rs 8,770 crore dip in retail AUM from equity funds.

Retail mutual fund investors have exited equity funds in hordes. They have rushed to debt funds for safer returns. The latest data released by AMFI shows that as many as 15.76 lakh retail equity folios were closed in FY 2012. Overall, there were 3.92 crore equity folios in March 2011; the number is now 3.76 crore folios in March 2012, a decline of 16.40 lakh folios. Close to 96% of the drop in folios was due to exit of retail investors.  

Equity funds saw total erosion of Rs 15,160 crore in AUM in FY12 and the retail segment accounted for 58% or Rs 8,770 crore. “There is an increasing trend of customers putting money in debt rather than equity. Some investors are going in for redemption and shifting to debt,” says Vijay Mantri, CEO, Pramerica Mutual Fund.

Total folios

Overall, there were 7.82 lakh folio closures in FY 2012 from all fund categories. The industry had 4.72 crore folios in March 2011. This figure has dropped to 4.64 crore folios as on March 2012, a decline of 7.82 lakh folios.

Industry experts are citing redemption from SIPs as the main reason for drop in equity folios. “A lot of retail investors are going in for redemption. They don’t mind exiting even if the return on their investments through SIPs is not significant. Debt instruments like FMPs, tax-free bonds and NCDs have been attractive. A lot of investors have got disillusioned with equity funds and thus money is flowing out of these schemes. The erosion in equity AUM cannot be just attributed to the drop in markets,” says Suresh Sadagopan of Ladder 7.  

Shift towards debt

Retail investors seem to have taken a liking for debt funds. Retail debt folios have gone up to 45 lakh in March 2012 from 39.29 lakh folios last year, a spike of 5.71 lakh folios. Total debt folios went up to more than 50 lakh from 43 lakh in 2011, registering an increase of 7.14 lakh folios. 80% of this spurt was due to retail investors.

 Category

Category

AUM in 2012*

AUM in 2011

AUM change

Folios in 2012

Folios in 2011

Folio change

Equity

123549

132319

-8770

37068734

38644938

      (1,576,204)

Debt

22005

17836

4169

4501302

3929431

          571,871

Source : AMFI (only retail folios & retail AUM considered in this table) *(AUM in Rs Cr)

 

Better returns from fixed income funds have made distributors push debt funds. The Sensex shed 9% in FY12. “A lot of SIPs may have matured and redemption might have happened. In the last one year, debt funds have posted 9% to 10% returns, whereas equity has given nothing,” says Dinesh Khemlani of Comsol Financial Solutions.
 
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