Folios in the mutual fund industry have been declining steadily over the last few years. However, calendar year 2012 was particularly noticeable as investors, particularly from the retail segment, left in hoards with declining equity markets. Even when markets picked up towards the end of the year, retail investors were conspicuous by their absence.
Folio is a unique number identifying one’s account with the mutual fund.
“We have lost many folios especially in the months of September, October and towards the end of November when the markets picked up. Investors were redeeming their units either with an aim to regain their capital or to book profits,” said V. Krishnan, President, Integrated Enterprises.
3.6% drop in 7 months
According to data from the Association of Mutual Funds in India (AMFI), between March and September, retail folios fell by about 3.6 per cent to 4.35 crore. For the year-ended September 2012, retail folios fell 5.25 per cent.
Retail folio count at the end of September 2011 and March 2012 stood at 4.59 crore and 4.52 crore. AMFI discloses folio data on a half-yearly basis in March and September every year. Retail folios account for about 97 per cent of the total folios in the industry. The total number of folios in the country is 4.48 crore as at end September.
Industry officials and analysts alike said that this year saw “record number of redemptions.” Most investors now choose to invest through systematic investment plans, said analysts. But even SIPs which are supposed to be long-term investment vehicles did not see an increase in subscriptions or renewal, in case of expired subscriptions, they said.
Systematic Investment Plans refers to periodic investments made in mutual fund schemes by investors who are looking at creating wealth over a long period of time. The average ticket-size of an SIP is around Rs 1,000.
Between September 2011 and 2012, debt AUM increased by 15 per cent, while the folio count in these schemes grew by 17 per cent 55 lakh. Analysts said that they had also seen many retail investors moving from equity products to the debt schemes of mutual funds, especially the short-term funds. Portfolio advisors said that they had been advising clients to increase allocation in debt funds and reduce equity exposure.
Moves to debt-oriented
“Retail investors increased their presence in debt-oriented mutual funds (including gilt and liquid funds) with the number of retail folios rising by 10.5 per cent in the past six months (April-September). This can be attributed to investors looking at relatively safer investment options post the volatility in the domestic equity markets in 2011,” said a report by CRISIL on the folio count in the industry.
The gold exchange traded fund (ETFs) category continued to grow as gold prices soared. Folio count in the gold ETFs category rose by about 10 per cent to 4.9 lakh from 4.7 lakh between March and September. Between September 2011 and September 2012, gold ETF folio count increased by 14.7 per cent.
The total number of folios in the exchange-traded funds (other than gold) category increased about one-fourth to 1.5 lakh from 1.2 lakh in the one-year period ending September 2012.