Bleeding Economy sparks Exodus in Mutual Funds - The New Indian Express

Bleeding Economy sparks Exodus in Mutual Funds

Published: 29th April 2014 08:11 AM

Last Updated: 29th April 2014 08:11 AM

Volatile market conditions and poor investor sentiment in the equity market led to mutual funds losing as many as 33 lakh accounts or folios in the just-ended financial year (2013-14). This is the fifth consecutive year when mutual funds saw an erosion of its investor base. Folios are numbers designated to individual investor accounts, though one investor can have multiple folios.

Market watchdog Sebi data showed that total investor accounts in 44 fund houses fell to around 3.95 crore at the end of 2013-14, from 4.28 crore in the last fiscal (2012-13) — a decline of 33 lakh new investor accounts.

Citing reasons for the sharp decrease in the number of retail folios, Axis AMC national sales head Karan Datta said volatility in equity market had prompted investors to exit. “The sharp decline in retail folios was mainly in the equity category which was impacted by volatility,” he added. He noted that every year mutual fund investors have been quitting.

In 2013-14, the number of investor folios for equity schemes fell by 40 lakh. The total number of folios in equity funds were 2.92 crore at the end of 2013-14, compared to 3.31 crore in the preceding fiscal.

In the past five financial years till 2013-14, the MF sector lost more than 88 lakh investor accounts. The sector, which held 4.75 crore folios at the end of financial year 2008-09, saw an increase of 3.66 lakh new investor accounts to 4.8 crore in 2009-10.

However, later the number of folios witnessed a downward trend and tumbled to 3.95 crore during the past financial year.

According to the Sebi data, the total number of folios in debt funds rose by about 7.28 lakh to 68.67 lakh at the end of March 2013. Balanced schemes, which invest in equity and debt category, gained 10,824 folios to end at 26.13 lakh in the last financial year. However, exchange-traded funds saw a drop of 34,773 folios to 7.04 lakh investor accounts at the end of March this year.

 (With agency inputs)

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