Equity funds have lost over 1 crore folios since 2009

Choppy markets and folio consolidation see the number of equity fund folios drop to 2.98 crore from 4.11 crore in 2009, show SEBI data.

Mutual fund industry lost more than one crore folios since 2009 from 4.11 crore to 2.98 crore investor accounts as on December 2013, shows SEBI data.

The industry has seen a continuous exodus of investors since 2009 which is evident by the rapid dip in equity folios. The industry received a record net inflow of Rs. 46933 crore in FY2007-08 when the industry launched 46 new equity funds.

Despite distributors and AMCs efforts to educate investors to remain invested and continue their SIPs, the trend of equity fund closure continues, albeit at a slower pace. The trend continued in December as well. The latest SEBI data shows that equity funds lost 3.47 lakh folios in December, though the pace of closures dropped marginally compared to November. The industry lost 3.82 lakh folios in November. Equity funds constitute 75% of the four crore folios of the industry. 

The industry is witnessing a trend of redemptions at every market peak. Industry officials say that investors have started to redeem after the market touched the psychological level of 21000. The BSE Sensex gained 379 points in December to reach 21171.

From April to December, equity funds have seen net outflows of Rs. 8341 crore. Investors poured in Rs. 30929 crore in equity funds and pulled out Rs. 39271 crore during the same period which resulted in a net outflow of Rs. 8341 crore.

Many AMCs are launching close end funds to bring investors. AMCs have launched nine close end equity funds so far which have mopped up close to Rs. 1500 crore. More such funds are expected to be launched.

Industry experts also attribute the decline in folios to folio consolidation. However, the exact proportion of the drop in folios due to consolidation is tough to estimate. “Investors don’t tend to create new folios these days to avoid KYC hassles. The drop is also due to redemptions since the market has not moved anywhere from the last five years and net sales have been negative,” said an operations head of a bank sponsored fund house.

Debt

Apart from equity funds, balanced funds and ETFs also saw a dip in folios. The only category which has seen growth in folios is debt funds. Debt funds added 40,290 in December and from April till December, the category has seen a growth of more than five lakh folios. Debt funds have received net inflows of Rs. 87391 crore during the same period.