Folio consolidation and redemptions from equity funds have led to the closure of 49.82 lakh equity folios since March 2010
Thanks to bad market conditions, folio consolidation and redemptions, the mutual fund industry has been seeing a relentless depletion in equity folios. Since March 2010, equity schemes have lost a whopping 49.82 lakh folios till August 2012 while debt funds have added 19.22 lakh folios.
As per the latest SEBI data, there has been a drop of more than 15 lakh equity folios (including ELSS) — from 3.76 crore folios in March 2012 to 3.61 crore folios in August 2012. On the other hand, debt folios have increased from 52.50 lakh to 56.60 lakh during the same period, an addition of 4.10 lakh folios.
Industry officials say that many investors are shifting from equity to fixed income funds, which has led to a growth in debt folios.
“The industry has been seeing some redemption in equity funds. Existing investors are shifting towards debt funds while new investors are finding value in fixed income. Investors are realigning their portfolios with a bias towards fixed income,” says Himanshu Vyapak, Deputy CEO, Reliance Mutual Fund.
ETF folios (including gold ETFs) went up from 6.23 lakh in March to 6.42 lakh, an increase of 18802 folios. Except debt and ETFs, all other scheme categories saw their folios decline. Overall, the industry lost 11.39 lakh folios in the last five months.
Industry officials say that the continuous drop in folios is also largely
due to redemptions from equity schemes. In August, equity funds had seen Rs
2096 crore net outflow while income funds had seen Rs 7548 crore net inflow. Net
outflows from equity funds stood at Rs 3035 crore (YTD) as on August.
“It
could be because of partial shift from equity to debt. Investors are investing
in short-term and long-term bond funds. We are seeing some new accounts getting
opened in debt funds and these investors are coming from all cities and towns,”
said Kailash Kulkarni, CEO, L&T Mutual Fund.
