The mutual fund industry has added 56.50 lakh retail folios in the last one year, shows the latest AMFI data. The retail folios (across all categories) increased from 4.08 crore in June 2015 to 4.65 crore in June 2016, primarily due to a healthy growth in retail equity folios.
Retail equity folios increased by 37.91 lakh from 3.16 crore in June 2015 to 3.54 crore in June 2016. This was evident by the growth in assets under management in retail equity assets which went up by Rs. 32,033 crore from Rs. 1.95 lakh crore to Rs. 2.27 lakh crore during the same period. As a result, the total equity assets of the industry (across all categories) increased from Rs. 3.72 lakh crore to Rs. 4.28 lakh crore. A large share (57%) of this growth was driven by retail assets. Of the Rs. 55,899 crore growth in total equity assets, retail assets accounted for Rs. 32,033 crore. This is because retail investors dominate equity funds. Of the total Rs. 4.28 lakh crore equity assets as on June 2016, 53% or Rs. 2.27 lakh crore AUM is held by retail investors.
Balanced funds
Retail investors also rushed to balanced funds which was evident by the growth in AUM and folios in this category. Retail folios in balanced funds increased by 4.55 lakh and the AUM increased by Rs. 5,220 crore. Interestingly, HNIs have a higher exposure to balanced funds. Retail investors share in balanced funds stood at 37% while HNs share stood at 47%.
Distributors say that investors are feeling safe in balanced funds which come with less risk as compared to equity funds. “Distributors are confused about the market. So they are recommending balanced funds which are able to generate returns on par with large cap funds. These funds have lower degree of risk,” says Satish Pandey of Imperial Investment Consultancy.
Debt
Besides equity, retail investors’ exposure to debt funds also saw a healthy growth. AMFI data shows that retail debt assets grew by Rs. 16,030 crore. This was reflected in the growth in retail investor accounts in debt funds which went up by 12.12 lakh.
Liquid funds are also getting popular among retail investors. AMFI data shows that retail folios have jumped by 92% from 2.43 lakh in June 2015 to 4.67 lakh in June 2016. “Since there is a fear that valuations are quite high and markets could correct, investors are preferring to do STP from liquid funds to balanced and equity funds. They don’t want to invest lump sum,” points out Satish Pandey of Imperial Investment Consultancy.
While retail assets in debt funds are growing, they still account for a small 8% of the debt fund pie. On the other hand, HNIs have a sizeable exposure to debt funds. HNI hold Rs. 1.96 lakh crore or 32% of the total Rs. 6.19 lakh crore assets in debt funds.
Gold ETFs
Value Research data shows that Gold ETFs have generated 27% absolute return over the past one year due to the recent rush to safe haven assets following Brexit. Most of this return was generated in the last few months. Market participants say that this led investors to book some profits which was reflected in the drop in retail Gold ETF folios which fell by 43,641. As a result, the retail Gold ETF AUM fell by 118 crore. “Gold didn’t generate any return in the last two years and investors were stuck in these funds. So when the gold prices shot up, they took this opportunity to switch from gold to different asset classes,” says a Mumbai based distributor.
