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Debt mutual fund folios have in the last one-month period seen a growth of 4.25 per cent, while equity schemes continued to face redemptions as folio numbers declined by 1.02 per cent.
From March to April, debt folios have increased from 45 lakh to 47 lakh, while equity has fallen from 3.9 crore folios to 3.8 crore.
A folio is a reference number of the mutual fund account.
The average assets under management by mutual funds during the same period increased by 7 per cent to Rs 7.55 lakh crore.
As on April 2011, the number of folios in the industry was 4.7 crore, of which 47 lakh folios belong to the debt category and 3.8 crore to the equity category.
Since March 2009, the share of debt scheme folios in the industry has increased while that of equity schemes has seen a steady decline.
According to data on the SEBI Web site, debt folios have seen their share increase from 6.8 per cent to 10.03 per cent from 2009 to 2011. During the same period, equity scheme folios have seen their share decline from 85.7 to 82.7 per cent.
Debt schemes include income, liquid and gilt funds. As of March 2009, the number of folios in the industry was 4.79 crore.
According to data on the Association of Mutual Funds in India Web site, about one million retail folios were added to the debt schemes contributing to a 34 per cent folio growth in the category.
“Earlier debt schemes were not spoken of widely. But now even the fund houses are showing a keen interest in promoting debt schemes,” said Mr Rajesh Krishnamoorthy, Managing Director, iFast Financial and fundsupermart.com.
“Also, the benefit of asset allocation for the investors, along with rising interest rates, has made the debt schemes more attractive.”
One of the main reasons for increased retail participation in debt schemes has been the increase in the number of Fixed Maturity Plans (FMPs) launched by fund houses. Between October and April, about 50 FMP schemes were introduced by fund houses.
“In the last six months a lot of FMP products have been launched with three-month, six-month and one-year tenures,” said Mr Hiren Dhakan, Associate Fund Manager, Bonanza Portfolio. “These schemes guarantee higher returns as interest rates are high and also provide double indexation benefits. However, this increase in debt scheme folios may be a temporary phenomenon as equity will see higher participation once the market bounces back.”
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