Mutual funds lose 8% retail folios in H1FY14: CRISIL

India Infoline News Service | Mumbai |

This was the sixth consecutive half yearly decline in retail folios as per AMFI’s disclosure.

Mutual funds lost a record 8% or nearly 35 lakh retail folios over the past six months ended September 2013 (see table 1) as per the data released by the Association of Mutual Funds in India (AMFI). This was the sixth consecutive half yearly decline in retail folios as per AMFI’s disclosure. At the overall level (including institutional and high net worth individuals’ folios), a gain in folios of high net worth individuals (HNIs) capped the fall at 15 lakh folios. The industry currently has 4.13 cr folios.

Retail folios decline on volatility in the equity market
The sharp decline in retail folios was mainly in the equity category (see table 2) which has been impacted by the ongoing volatility in the segment. The CNX Nifty has risen a meager 1% in the past six months and declined nearly 3% in the calendar year until September 2013. Macroeconomic weakness in the domestic market coupled with some mixed cues from the global market led to the decline in the local market. Balanced funds (an equity oriented hybrid category) too saw a decline of over 2 lakh retail folios over the past six months.

Gold ETFs see fall in retail folios for the first time
Gold exchange traded funds (ETFs) saw a decline in their folio count for the first time. Retail folio count in the category fell by 5% to 5.24 lakh in the period under review compared with a 16% rise in the preceding six months. Investors exited the category due to volatility in the underlying asset class as domestic gold prices (represented by the CRISIL Gold index) fell by over 2% in the calendar year till September 2013.

Debt funds see uninterrupted rise in retail folios
Debt funds continued to attract retail investors with the category witnessing an uninterrupted rise in retail folios since March 2009. Debt funds added 1.79 lakh folios over the past six months compared to 1.69 lakh folios added in the previous six months ended March 2013.

HNIs folios triple in six months
Folios held by HNIs, defined as individuals investing Rs 5 lakh or more, rose three times in the first half of the current financial year led by a sharp rise in equity folios. Out of the 30 lakh HNI folios, 21 lakh were added in the latest half year period (see table 3). In the category, the equity segment added over 14 lakh folios followed by balanced funds and debt oriented funds, which added 3.45 lakh and 2.72 lakh folios in the past six months. In AUM terms, HNI portfolio in equity oriented funds increased by 30%, balanced by around 14% and by 8% in debt oriented funds. The biggest gain in HNI portfolio in AUM terms was in liquid funds, which increased by 106% to nearly Rs 12,000 cr. 

68% of retail equity AUM invested for over two years
Tenure-wise analysis of assets under management (AUM) across investor types and categories for the half year ended September 2013 showed that 68% of the retail AUM stayed in equity mutual funds for more than two years, higher than 63% seen in the preceding six months. Out of the Rs 1.06 lakh cr of retail investment in equity-oriented mutual funds, Rs 71,661 cr of investment was held for over 24 months. About 59% of HNIs by AUM stayed invested in equity mutual funds for more than two years.

Corporates continue to dominate mutual fund AUM
Corporates continued to dominate mutual fund AUM; they enjoyed a 49% share in September 2013 (see table 4), up from 46% in March 2013. HNIs were the second biggest contributor with 30% share (higher than 28% in March 2013) followed by retail investors with 19% (lower than 23% in March 2013).

Table 1: Investor-wise composition of number of folios (in lakh)
Investor Classification Sep-13 Mar-13 Change % Change
Retail 379.33 414.04 -34.71 -8.38
High net worth individuals^ 30.12 9.36 20.75 221.63
Corporates 3.59 4.85 -1.26 -25.92
Others* 0.03 0.03 0.00 6.04
Total 413.07 428.28 -15.21 -3.55
Table 2: Composition of retail folios (in lakh)
Category Sep-13 Mar-13 Change Change %
Equity Oriented 292.11 326.35 -34.24 -10.49
Debt Oriented 53.31 51.52 1.79 3.47
Balanced 23.30 25.42 -2.12 -8.36
Gold ETF 5.24 5.52 -0.28 -5.08
Liquid/Money Market 1.68 1.62 0.06 3.58
Fund of Funds investing Overseas 1.65 1.64 0.02 0.98
ETFs(other than Gold) 1.52 1.45 0.07 4.81
Gilt 0.52 0.52 0.01 1.18
Total 379.33 414.04 -34.71 -8.38
Table 3: Composition of high net worth individuals’ (HNIs) folios (in lakh)
Category Sep-13 Mar-13 Change Change %
Equity Oriented 17.65 3.38 14.27 422.75
Debt Oriented 7.67 4.95 2.72 54.90
Balanced 3.97 0.52 3.45 667.15
Liquid/Money Market 0.54 0.23 0.31 137.03
Gold ETF 0.10 0.12 -0.01 -12.68
Fund of Funds investing Overseas 0.08 0.07 0.01 15.34
Gilt 0.08 0.07 0.00 3.78
ETFs(other than Gold) 0.03 0.03 0.00 -3.21
Total 30.12 9.36 20.75 221.63
Table 4: Investor-wise composition of AUM
Investor Classification Sep-13
(Rs cr)
(Rs cr)
Change % % of total AUM
% of total AUM
Corporates 366547 324845 12.8 49 46
High net worth individuals^ 222185 193613 14.8 30 28
Retail 139429 161981 -13.9 19 23
Others* 17807 22055 -19.3 2 3
Total 745969 702494 6.2 100 100



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