Equity funds lose over five lakh folios in September

Investors rushed to exit their investments from equity funds as the Sensex crossed 20000 levels in September, show SEBI data. The S&P BSE Sensex rose 4% in September. Consequently, the mutual fund industry lost more than five lakh folios from equity funds (including ELSS) in September, that’s a decline of more than 16000 folios each day.

The trend is same over the past six months. From April to September, equity funds saw a whopping 20.04 lakh folios decline, from 3.31 crore in March to 3.11 crore in September resulting in a net outflow of Rs 6355 crore.

“The market has been volatile over the last seven months. Thus, inflows don’t typically come when markets are volatile. If the markets sustain the upward trend for a while then retail investors would start investing,” said Anthony Heredia, Managing Director, Morgan Stanley Mutual Fund.

Thanks to robust FII inflows, Indian markets are close to all time high. The S&P BSE Sensex is trading at 20,800 levels and fund officials expect that redemptions will continue in October also.

Overseas fund of funds which have delivered 18% returns over a one year period attracted investor interest as 2000 new folios were added in this category. ICICI Prudential and JP Morgan launched their US focused funds recently which also resulted in the category seeing an increase in folios. The AUM in this category went up from Rs. 2064 crore as on March 2013 to Rs. 2374 crore in September 2013.

The only category which saw an increase in folios was debt. In September, the industry added close to eight lakh folios in debt funds. Industry officials attribute the rise in debt folios to the popularity of FMPs. According to AMFI data, AMCs launched 119 FMPs which mopped up Rs. 10519 crore in September. Overall, debt funds saw net inflows of Rs. 43,576 crore in the last six months.

Folios