The Telegraph
Wednesday , May 7 , 2014
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MF retail investors in exit mode

Mumbai, May 6: The number of retail accounts (folios) with mutual funds fell by as much as 16 lakh, or 4 per cent, in the second half of 2013-14, the sixth consecutive half-yearly decline.

Cashing in on the surge in stock prices and fearing volatility ahead, retail investors pared their holdings in equity-oriented schemes during the period. Equity schemes make up 75 per cent of the exposure of retail investors in funds.

According to data released by the Association of Mutual Funds in India (Amfi), the industry had a total of 3.95 crore folios, including institutional investors and high net worth individuals, in the second half of 2013-14 against 4.13 crore folios in the preceding six months. Retail folios stood at 3.63 crore against 3.79 crore in the first half, a drop of 4.25 per cent.

During the second half, the equity category saw the maximum decline in the number of retail folios as investors booked profit because of a steep rise in equity values coupled with the apprehension of volatility ahead, a Crisil note stated.

The total number of equity folios held by retail investors during the period fell 6.36 per cent to nearly 2.74 crore from 2.92 crore in the first half of the fiscal.

High networth individuals (HNIs), too, turned away from equities.

“After rising almost three times in the first half of 2013-14, the number of folios held by HNIs (individuals investing Rs 5 lakh or more) declined 5 per cent, or 1.5 lakh folios, in the second half of the year as the segment chose to book profit,” the rating agency said.

It added the overall decline in the equity segment was offset by an increase in the number of folios in the debt and money market-oriented funds.

In the gold exchange-traded funds (ETFs), retail folios fell nearly 7 per cent to 4.89 lakh against a 5 per cent decline in the first half of 2013-14. This shift has been attributed to volatility in the underlying asset class. Moreover, domestic gold prices fell around 6 per cent during the year.

However, debt funds category continue to witness a rise in retail folios. “Debt funds added 2.91 lakh retail folios over the past six months, highest since September 2012,” it said.

During this period, retail equity assets held for more than two years dipped to 62 per cent, lower than 68 per cent seen in the preceding six months.