Individual equity fund investors invest for long term

“The corporate investors in debt funds are proving to be unstable in their investments,” says FC Research Bureau analysis.

May 17, 2012 1:14 IST | India Infoline News Service
According to an FC Research Bureau analysis of the latest Association of Mutual Funds in India (AMFI) data, instead of individual investors, who are considered to be of fickle mind in equity funds, it is actually the corporate investors in debt funds who are proving to be unstable in their investments.
The FC Research Bureau analysis is based on age-wise break up of aggregate assets under management (AUM) as on 31 March 2012. This age-wise break-up of AUM is provided separately for equity and non-equity funds, and further classified into AUMs coming from different types of investors such as corporates, institutional, high-networth individuals (HNIs) and retail individuals. The non-equity funds included liquid and money market funds, debt funds, gilt funds and gold exchange traded funds (ETFs) among others.
The AMFI’s disclosure indicated that non-equity funds had an aggregate AUM of Rs. 384.19 billion, of which 81.5% that is Rs. 3.14 trillion was derived from investors’ subscriptions in the one year period up to FY11-12. Another 10.8% of this aggregate AUM was derived from investments made in FY10-11. And only 7.6% came from investors’ subscriptions made prior to that.
However, liquid funds made up for 20.8% – and debt funds made up for 75.7% — of the aggregate AUM of non-equity funds, and taken together, they accounted for 96.5% which is Rs. 3.71 trillion. The AMFI’s disclosures indicated that 64.7% of this collective AUM of Rs. 3.71 trillion was jointly from corporate and institutional investors, indicating their joint dominance of liquid and debt funds.
AMFI’s non-equity funds’ aggregate AUM of Rs. 3.85 trillion, too, had 63.7% coming jointly from corporate and institutional investors. Subscriptions coming from these investors amounted to Rs. 2.18 trillion (56.7%) in FY11-12, 4.4% in FY10-11, and only 2.6% in all years up to end of FY09-10.
Non-equity AUM emanating from HNIs and retail individual investors amounted to 24.9% in FY11-12, 6.4% in FY10-11 and 5% in pre-FY10-11 periods. This indicates a far-higher volatility in the AUM of non-equity funds, dominated by liquid and debt funds, came from corporate and institutional investors than it did from individual investors.
For equity-oriented funds, of aggregate AUM of Rs 2.03 trillion, only 26% emanated from investors in FY11-12, while 53% emanated over two years back. Individual investors made up for 87% of the aggregate AUM with investments emanating from them in FY11-12, accounting for only 20.6%, and those emanating from them more than two years ago accounting for a high 49%.
Individual equity fund investors have shown their investments to be more long-term in nature than corporate debt fund investors.

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