Equity funds lose nearly 15 lakh folios in the last five months

MF industry has lost 13.23 lakh folios across all categories largely due to a dip in equity folios.

Redemptions and the resultant loss in folios from equity funds continue unabated. The latest SEBI data shows that equity mutual funds have lost 14.96 lakh folios from April to August 2013. Equity funds have witnessed net outflows to the tune of Rs 4126 croreduring the same period even as the S&P BSE Sensex fell by1% during the same period.

NileshSathe, CEO, LIC Nomura MF attributes the loss in folios to volatility in equity market.  “Many investors have redeemed their investments when the market touched 19,000 levels. Also, stock market has negatively reacted to the implementation of Food Security bill. This has added woes to the country’s widening current account deficit. Owing to all these reasons, new investors are unwilling to make an entry into the equity market. However, we are hopeful that investors will come back to equity mutual funds if the market sustains 20,000 levels.”

As on March 2013, the equity folio count was 3.31 crore which dropped to 3.16 crore in August 2013. Balanced funds, which invest in both debt and equity, alsolost 89,200 folios.

“Rupee depreciation has hit the market sentiments resulting in outflows from equity mutual funds as well as decline in number of folios,” says DebasishMallick, MD &CEO, IDBI Mutual Fund.

Gold ETFs, which werewitnessing good inflows and continuous folios additions,also seem to be losing steam. Gold ETFs recorded a dip of 23,781 folios, thanks to volatility in gold prices.Chirag Mehta, Fund Manager, Commodity, Quantum Mutual Fund says that many investors have booked profits from Gold ETFs. He added that retail investors are beginning to lose confidence in gold due to volatility in prices.

However, debt categories such as liquid, gilt and debt funds have added more than three lakh folios from April till August 2013. From April to August 2013, the industry received net inflows of Rs 69,252 crore largely on account of inflows from debt funds.

Source SEBI