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The mutual fund industry shed around 80 per cent of folios belonging to banks and financial institutions in FY12. The decline was largely due to an RBI directive. RBI had asked banks to reduce their MF exposure to a maximum of 10 per cent of their net worth to mutual funds.
Banks were supposed to comply first by October 2011. This was later pushed to December 2011. Banks and financial institutions closed around 10,000 folios during the last fiscal.
However, the total number of folios fell by around two per cent during the same period. It stood at 4.64 lakh crore as at end March 2012.
Folios, or the number of mutual fund accounts has been on a gradual decline for the past two year.
At the end of FY10, the folios numbers stood at 4.79 crore, 4.72 crore in FY11 and 4.64 crore in FY12.
At the end of March 2012, the AUM stood at Rs. 5.87 lakh crore, down one per cent from March 2011.
Within the investor categories, FIIs have seen the maximum growth of 23 per cent but their folio numbers amount to only 160. Folios of high networth individuals (HNIs) have seen a five per cent jump adding around 36,000 more accounts this year.
HNIs are investors whose minimum ticket size is Rs five lakh. This category, according to fund house officials is being pursued mainly by the distributor community as the margins are higher here due to bigger ticket sizes. “With the business becoming more focussed, distributors are now shifting their attention to the HNI segment as they get more money there,” said the CEO of a mutual fund house.
Retail folios, at 97 per cent, continue to account for the bulk of the folios in the industry. However, their folio share has fallen marginally over the last two years and analysts fear it will continue to do so. The total number of retail investors folios in the industry is around 4.52 crore. “Even though the number of equity folios has declined, there has been a net growth in SIP numbers. The investor appetite has been low due to poor equity market performance,” said the marketing head of an Indian fund house.
The category which saw maximum inflow of folios was gold exchange traded funds (ETFs). Folios under gold ETFs grew by around 50 per cent to 4.75 lakh folios. ETFs, other than gold also saw their folios increase by 44 per cent to 1.48 lakh folios.
Analysts say that this category will continue to grow as gold ETFs continues to be attractive as an investment category. The category of gold ETFs saw some initial buzz as with most new products.
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