Retail folios in equity funds see record rise in H1FY15

Retail investors returned to equity mutual funds after a long hiatus. The equity category, which reported a consistent decline in retail folios from H2FY11 until H2FY14, posted a record addition of 4 lakh folios in H1FY15 to 2.90 cr folios (Table 2).

A strong rally in the equity market and the consequent rise in investors' interest led to a sharp increase in retail folios. The equity market benchmark CNX Nifty gained 19 per cent in the six months ended September 2014 on hopes of economic reforms by the new government.

At the aggregate level, however, retail folios fell marginally due to a decline in balanced fund folios. An analysis showed that of the Rs 1.72 lakh cr of retail investment in equity-oriented mutual funds, Rs 1.10 lakh cr continued for over 24 months.

HNI segment saw 15 per cent rise in overall folio count
The high net worth investor (individuals investing Rs 5 lakh or more) segment posted 15 per cent rise in aggregate folio base (Table 3) in H1FY15. The equity fund category was the major contributor with rise of 46 per cent or 1.56 lakh folios to 4.95 lakh folios on positive sentiment for the equity asset class.

Retail folios in liquid and debt fund continue to rise
Retail folios in debt funds maintained the uptrend (since March 2009) in H1FY15. The category added 2.50 lakh retail folios over the past six months as compared with the addition of 2.61 lakh folios in the preceding six months.

Retail folios in liquid funds saw third consecutive half-yearly rise. The category added 19,179 folios taking the total to 2.41 lakh folios in the six months ended September 2014.

Gilt fund folios post second consecutive decline
All investor segments (retail, HNIs and institutions) continued to shy away from gilt funds due to flat interest rates amidst lack of monetary easing by the Reserve Bank of India (RBI). The category's folio base slipped 11% to 50,937 accounts.

Gold ETFs lose some more sheen
Gold exchange traded funds (ETFs) posted their third consecutive half-yearly decline in the overall folio count. The retail segment saw closure of 21,557 folios to end at 4.68 lakh folios in the period under review compared with closure of 35,013 folios in the preceding six months. Domestic gold prices (represented by the CRISIL Gold index) fell 5 per cent in the six months ended September 2014.

Balanced fund retail folios maintain downtrend
Retail investors continued closing accounts in balanced funds, with the category reporting a sharp fall of 30 per cent or 7.76 lakh folios.

Retail equity AUM invested for over two years rise to 64 per cent
Tenure-wise analysis of assets under management (AuM) across investor types and categories for the half year ended September 2014 showed that 64 per cent of retail AuM stayed in equity mutual funds for more than two years, higher than 62 per cent seen in the preceding six months.

Of the Rs1.72 lakh crore of retail investments in equity-oriented mutual funds, Rs1.10 lakh crore was held for over 24 months. About 32 per cent of HNIs, by AuM, stayed invested in equity mutual funds for more than two years, lower than 47 per cent seen in the preceding six months.

Corporates continue to dominate mutual fund AUM
Corporates continued to dominate mutual fund AuM with 47% share in September 2014 (Table 4), down from 49 per cent in March 2014.

HNIs were the second biggest contributor with a 28 per cent share. The retail segment's share in total mutual fund AuM rose to 22 per cent in the latest six months from 21 per cent in the preceding six months.