Retail investors invest for the long haul – AMFI data

Out of the Rs. 1.14 lakh crore which stayed invested in equity funds for over two years, 63% or Rs. 71,661 crore was held by retail investors, followed by HNIs (26%), show AMFI data. Banks and FIIs held the least investments during the same period, 0.04% and 2% respectively. Banks held just Rs. 439 crore for more than two years while FIIs held Rs. 858 crore.

 Similarly, retail investors had the highest share of investments 60% or Rs. 15902 crore of the total Rs. 26541 crore held for up to two years followed by HNIs (Rs. 7762 crore or Rs. 29%). Traditionally, retail investments are known to be sticky unlike institutions which book profit at regular intervals.

 However, the data shows that retail investments held for more than two years fell from Rs. 80628 crore in March 2013 to Rs. 71,661 crore in September which suggests that investors cashed out of equity funds. This is evident in the 35 lakh drop in retail equity folios in the last six months. The industry saw net outflows of Rs 6355 crore from equity funds from April to September 2013.  

 Out of the Rs 1.80 lakh crore equity assets managed by the industry, retail investments constituted the highest at 59% or Rs 1.06 lakh crore, followed by HNIs 28% or Rs. 50,959 crore. “Retail investors have been staying put for a long time to get an exit opportunity. Those who have invested in the beginning of year 2008 have not gained any returns. They are exiting at every rally and are questing the concept of long term investing now,” says Suresh Sadagopan of Ladder7 Financial Advisories.

 “A major chunk of retail investors invest through SIPs. SIP culture has picked up very well among investors. Retail investors are passive compared to HNIs and corporates. Banks and FIIs mostly invest in liquid funds. They book profits from equity funds quickly due to which their age of assets is less. The phenomenon is similar worldwide. The AAA rated US Treasury Fund’s average age of assets is 12 days,” points out Vinod Jain of Jain Investment.

 A large chunk of investments in debt funds continues to be held by corporates.

 Debt funds constituted Rs. 5.65 lakh crore of the total Rs 7.45 lakh crore AUM of the industry as on September 2013. An overwhelming 61% or Rs 3.46 lakh crore consisted of corporate investments, followed by HNIs at Rs 1.71 lakh crore.

 Debt funds saw increased participation from retail investors. Retail investments in debt funds went up from Rs 29,113 crore in September 2012 to Rs. 33164 crore. “FMPs and dynamic bond funds have attracted a lot of retail investor interest. Retail investors have been investing in MIPs from the past five to seven years now,” adds Suresh.

 Age of assets