Mutual fund industry adds 28 lakh folios in the first quarter of FY 2017-18

One of the key indicators to gauge the confidence of retail investors in mutual funds is the growth in number of folios.

The latest SEBI data shows that the mutual fund industry has added over 28 lakh folio in the first quarter of FY 2017-18. As a result, the total folio count has reached close to 6 crore.

Another good news for the industry is the growth in equity folios. Of the total 28 lakh folios, the mutual fund industry added over 26 lakh folios in equity funds. Equity funds include pure equity funds, ELSS, balanced funds and ETFs that tracks indices. Reflecting the positive sentiment, the total folio count in equity has reached 4.75 crore.

AshutoshBishnoi, CEO,Mahindra Mutual Fund attributes the  growth in number of folios to increasing awareness and attractive returns. “Over the last few years, we have seen a shift in the behaviour of investors. Keeping in mind the attractive performance of equity funds over traditional investment instruments, many people have started investing in mutual funds. These people have understood the concept of real rate of returns after factoring in inflation,” saysAshutosh.

In percentage terms, balanced funds have witnessed the highest growth in folio count. The category has added more than 5 lakh folios between April and June, a growth of 15%. The 31 balanced schemes in the industry have more than 40 lakh folios at the end of June.

Experts say that HNIs are increasingly investing in balanced funds to take advantage of the both worlds – equity and debt markets. AMFI data shows that the AUM of balanced funds under the HNI category increased to Rs,51,000 crore from Rs,19,200 crore a year back. It has grown by Rs31,782 crore or 166% in the year.

“HNIs are interested in balanced funds as they want to protect their investments from the downside of market fall as balanced funds invest 65-70% in equities. Moreover, as the dividends generated by these funds are tax-free, balanced funds are gaining popularity among HNI investors,” says Mumbai-based Vishal Dhawan, founder, Plan Ahead Wealth Advisors.

On the other hand, Ashutosh says that investors who are retired or nearing retirementhave been taking advantage of the tax structure and regular dividend pay-outof the balanced funds.  

In debt category, the industry has added close to 2.50 lakh folios.

Barring ETFs that track indices, gold ETFs, and funds of funds, all other categories saw an addition in folio count.

Folio count in June 2017