December 25, 2016
New Delhi: More than 25 lakh new investor accounts or folios have been added to the equity mutual funds during the first eight months of the current fiscal year, primarily on account of strong participation from retail investors.
This is over and above an addition of 43 lakh folios in 2015-16 and 25 lakh in 2014-15. In the past two years, investor accounts increased mainly due to robust contribution from smaller towns.
Folios are numbers designated for individual investor accounts, though an investor can have multiple accounts.
According to Securities and Exchange Board of India (Sebi) data on investor accounts with 43 active fund houses, the number of equity folios jumped to 38,591,768 at the end of November from 36,025,062 at the end of last fiscal, a gain of 25.66 lakh.
Overall, the industry has witnessed an addition of 44 lakh investors' accounts to reach all-time high level of 5.2 crore.
The latest inflow has pushed the assets under management (AUM) of equity mutual funds to Rs. 4.68 lakh crore at the end of November from Rs. 3.86 lakh crore in March-end.
Growing participation from retail investors and huge inflows in equity schemes have helped in increasing the folio counts, experts said.
"Investors have seen the volatility of this year as a positive to average out costs. Besides, retail investors appear to have become savvier, using liquid schemes to either earn higher returns or to run Systematic Transfer Plan (STPs) into equity funds to average costs," says Srikanth Meenakshi, COO of FundsIndia.com, an online investment portal for MFs.
Mutual funds (MFs) have reported net inflows of over Rs. 73,000 crore in equity schemes in the first eight months (April-November) of the current fiscal year.
"Inflows in equities have regained pace since August 2016. Investors are investing whenever there is a drop in the markets as they consider it to be a good opportunity, which is good sign," Quantum MF chief executive Jimmy Patel said.
"The impact of demonetisation on the stock markets is likely to linger for some time and may lead to more inflows into equities if the markets continue to be bearish," he added.