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Mutual fund folios; who gained and who lost in 2022

16 Feb 2023 , 08:20 AM

It is said that assets under management (AUM) of mutual funds can be a good indicator at a very basic level. However, the AUM does not capture two very important facets of mutual fund investments. Firstly, it does not capture the retail spread of the growth in AUM. For instance, AUM growth may have come from just a handful of big investors  and that makes a different statement about the retail spread of AUM. Secondly, AUM also has a price impact i.e. if the stock market indices move up, then the AUM also goes up and the reverse holds true. The truth obviously lies somewhere in between.

One factor that truly captures the retail spread and is also not vulnerable to index movements is the growth in folios. Folios are unique accounts mapped to a particular PAN number and are unique to an AMC. So, an investor with investments across 4 AMCs may have 4 folio numbers. So, folios are not unique to customers, but are a good approximation of the retail spread of AUM growth. That is why folios numbers are important. Between January 2022 and January 2023, the total mutual fund folios grew from 12.31 crore folios to 14.28 crore folios; a growth of almost 2 crore folios in the last one year. Which fund categories benefited from this folio accretion?

Debt fund folios between January 2022 and January 2023

Overall, the debt fund folios fell by -4.52% between January 2022 and January 2023. The table below captures the folio movements of various categories of debt funds in last 1 year.

Debt Fund Types Folios (Jan-23) Folios (Jan-22) Change (%)
Long Duration Fund

                         39,497 

                             25,061 

57.60%

Overnight Fund

                     6,23,131 

                         5,10,759 

22.00%

Ultra-Short Duration Fund

                     6,44,605 

                         6,29,207 

2.45%

Money Market Fund

                     4,28,094 

                         4,27,920 

0.04%

Liquid Fund

                   17,81,851 

                       18,02,028 

-1.12%

Gilt Fund

                     1,70,646 

                         1,82,627 

-6.56%

Dynamic Bond Fund

                     2,19,116 

                         2,40,279 

-8.81%

Medium to Long Duration Fund

                     1,06,677 

                         1,17,657 

-9.33%

Credit Risk Fund

                     2,49,244 

                         2,75,874 

-9.65%

Gilt Fund with 10 year constant duration

                         41,972 

                             46,480 

-9.70%

Corporate Bond Fund

                     6,11,046 

                         6,79,222 

-10.04%

Floater Fund

                     2,43,940 

                         2,74,724 

-11.21%

Low Duration Fund

                     9,64,472 

                       10,91,088 

-11.60%

Banking and PSU Fund

                     3,00,675 

                         3,42,606 

-12.24%

Medium Duration Fund

                     2,53,176 

                         2,88,806 

-12.34%

Short Duration Fund

                     5,11,060 

                         5,94,922 

-14.10%

Grand Total                    71,89,202                         75,29,260 

-4.52%

Data Source: AMFI

Out of the 16 categories of debt funds, 12 fund categories saw contraction in folios and 3 saw growth in folios. Folios of money market funds were flat. Among the major gainers, long duration funds saw 57.6% growth in folios in last one year, albeit on a very small base. However, these funds have done extremely well in a tough market. Overnight funds also saw 22% growth in folios. Among funds that saw the maximum contraction in folios were short duration funds, medium duration funds, banking / PSU funds and low duration funds. 

Clearly, investors are not happy with the asset discretion used by fund managers in many of these funds. Overall, the preference of investors appears to be for more passive and at the shorter end of the duration curve. Investors have shunned duration based discretionary funds, where fund managers have struggled. Of course, the rising bond yields and tepid bond returns have been an overhang on debt funds in 2022.

Equity fund folios between January 2022 and January 2023

Overall, the equity fund folios surged 16.93% between January 2022 and January 2023. The table below captures folio movements of various categories of equity funds in last 1 year.

Equity Fund Types

Folios (Jan-23)

Folios (Jan-22)

Change (%)

Multi Cap Fund

                   39,22,006 

                       25,67,227 

52.77%

Small Cap Fund

               1,04,30,356 

                       73,64,508 

41.63%

Mid Cap Fund

               1,03,69,025 

                       83,56,221 

24.09%

Large & Mid Cap Fund

                   76,75,827 

                       63,93,977 

20.05%

Value Fund/Contra Fund

                   45,35,765 

                       39,57,921 

14.60%

Sectoral/Thematic Funds

               1,29,94,142 

                   1,14,37,336 

13.61%

Flexi Cap Fund

               1,25,87,368 

                   1,12,91,488 

11.48%

ELSS

               1,48,30,370 

                   1,33,48,560 

11.10%

Focused Fund

                   53,22,806 

                       48,45,840 

9.84%

Dividend Yield Fund

                     5,94,130 

                         5,56,184 

6.82%

Large Cap Fund

               1,29,45,224 

                   1,21,56,461 

6.49%

Grand Total                9,62,07,019                     8,22,75,723 

16.93%

Data Source: AMFI

Out of the 2 crore folios added overall between January 2022 and January 2023, nearly 70% or 1.40 crore folio additions happened in active equity funds. Out of the 11 categories of active equity funds available, all the 11 fund categories saw growth in folios. That clearly shows the bias of folios towards equities and which side the retail monies are veering. Multi-cap folios led the growth at 52.77% due to the surge in NFOs this year. However, more telling is the 41.6% growth in small cap fund folios and 24.1% growth in mid-cap fund folios. 

There has been a clear trend of investors preferring smaller stock funds that can alpha over large cap funds. Large cap folios disappointed with the lowest growth of 6.5%, but that is because large cap investors are gravitating towards index funds and index ETFs, for their lower costs. ELSS funds also disappointed on folio growth; and that can be attributed to the 10% tax on equity long term gains, which dampened interest in ELSS substantially.

Hybrid fund folios between January 2022 and January 2023

Overall, the hybrid fund folios surged 16.93% between January 2022 and January 2023. The table below captures folio movements of various categories of hybrid funds in last 1 year.

Hybrid Fund Types

Folios (Jan-23)

Folios (Jan-22)

Change (%)

Multi Asset Allocation Fund

                   10,05,254 

                         7,77,800 

29.24%

Dynamic Asset Allocation/BAF

                   44,33,648 

                       41,18,163 

7.66%

Aggressive Hybrid Fund

                   53,06,549 

                       50,08,192 

5.96%

Equity Savings Fund

                     3,63,281 

                         3,45,178 

5.24%

Conservative Hybrid Fund

                     5,19,088 

                         4,96,665 

4.51%

Arbitrage Fund

                     4,62,351 

                         5,08,149 

-9.01%

Grand Total                1,20,90,171                     1,12,54,147 

7.43%

Data Source: AMFI

The good news is that hybrid funds saw an expansion of folios in last one year. Out of the 6 categories of active equity funds available, 5 categories saw growth in folios with only the arbitrage funds showing contraction in folios. The contraction in arbitrage fund folios can be attributed to very low returns in the last two years amidst volatility in the equity markets. 

Multi-asset allocation funds saw the highest folio accretion in the last one year at 29.24%. This is due to a mix of multi asset allocation NFOs and the willingness of investors to look beyond equity allocation. Dynamic asset allocation funds (BAFs) had shown a lot of investor support about a year back, but the interest tapered as most BAFs have given negative returns in the recent past and the NFOs have also dried up.

Passive fund folios between January 2022 and January 2023

Overall, the passive fund folios surged 33.99% between January 2022 and January 2023. The table below captures folio movements of various categories of passive funds in last 1 year.

Passive Fund Types

Folios (Jan-23)

Folios (Jan-22)

Change (%)

Index Funds

                   33,89,328 

                       22,16,086 

52.94%

GOLD ETF

                   46,73,999 

                       34,64,739 

34.90%

Other ETFs

               1,18,54,687 

                       89,39,164 

32.62%

Fund of funds investing overseas

                   12,57,035 

                       11,82,926 

6.26%

Grand Total                2,11,75,049                     1,58,02,915 

33.99%

Data Source: AMFI

Out of the 2 crore folios added between January 2022 and January 2023, if active equity funds added 70% of the folios, the balance 30% was largely accounted for by passive funds. Passive funds saw expansion of folios in the last one year across all the 4 categories. Index funds led the way with 52.9% growth in folios and that can be largely attributed to the government using index funds for its bond issues. Index ETFs also grew folios by 32.6%. The surprise package was gold ETFs, which saw folio accretion of 34.9%, despite tepid fund flows. Investors may be waiting in the side lines for gold prices to come down. 

Related Tags

  • Folios
  • MF folios
  • Mutual fund folios
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