As markets gain, investors continue to cash out of equity funds

Retail investors are exiting equity mutual funds in hordes each time the market gathers steam, shows an analysis of SEBI data related to folio count.  In the month of April alone, the industry lost more than two lakh folios, largely from equity and ELSS funds. The industry mobilized Rs 2989 crore in April while investors pulled out Rs 3069 crore from equity funds which resulted in a net outflow of Rs 80 crore.

Equity funds lost approximately 2.64 lakh folios in April. There are 3.29 crore equity folios as on April, down from 3.31 crore folios in March 2013.

Robust FII inflows and expectations of lower interest rates have fuelled Indian stock markets with the BSE S&P Sensex breaching 20,000 levels. The BSE S&P Sensex has gained more than 300 points since the start of the calendar year. “As markets move up, the trend of redemptions continues,” said Ajit Menon, EVP, Head – Sales, DSP Black Rock Investment Managers.

Although the BSE S&P Sensex moved up 8% in FY2012-13, continued redemption pressure resulted in a decline of equity assets from Rs 1.79 lakh crore as on April 2012 to Rs 1.72 lakh crore in March 2013.  In the financial year 2012-13, investors pulled out Rs 12931 crore from equity schemes and Rs 1656 from ELSS.

Barring equity, overseas fund of fund and ETFs (other than gold), all other categories saw net positive inflows last year with income funds collecting Rs 82,981 crore, the highest in the debt funds category. Debt funds saw an increase of 43071 new folios in April.