Majority of retail investors stay invested in equity funds despite volatile markets

According to the data released by the Association of Mutual Funds in India (AMFI), over 60 per cent of retail investors stayed invested in equity mutual funds for more than two years.

AMFI released an age-wise analysis of assets under management (AuM) across investor types and categories for the half year ended September 2012.

The analysis showed that out of the Rs1.4 lakh crore of retail investment in equity-oriented mutual funds, Rs0.85 lakh cr of investment continued for over 24 months.

In contrast, high net-worth individuals (HNIs), who invested over Rs5 lakhs, redeemed 60 per cent of their portfolio in less than two years.

Mutual funds lose over 16 lakh folios in six months

Mutual funds lost over 16 lakh folios (3.5 per cent) over the past six months ended September 2012 to end with 448 lakh folios (see table ).

Most of the decline was seen in retail folios (especially in the equity category) as these were impacted by volatile market sentiments.

Investor-wise composition of number of folios (in lakhs)
Investor Classification
No of Folios Sep-12
No of Folios Mar-12
Change
% Change
Corporates
3.68
4.28
-0.60
-13.92
High net-worth Individuals^
8.94
8.15
0.79
9.67
Retail
435.50
452.07
-16.57
-3.67
Others*
0.04
0.03
0.01
23.00
Total
448.16
464.52
-16.37
-3.52

* includes Banks/FIs and FIIs

^individuals investing Rs 5 lakhs and above

(Numbers in lakhs)

Corporates dominate mutual fund AUM

Corporates continued to dominate mutual fund AUM with 46 per cent share compared to 43 per cent in March 2012 (see chart). They had 60 per cent share in the AUM of debt oriented funds. They were followed by HNIs with 25 per cent share and retail investors with 23 per cent share; their share was 27 per cent each as of March 2012.

Investor-wise composition of AUM (September 2012)

* Defined as individuals investing Rs5 lakh and above

Retail folios in debt funds continue to rise

Retail investors increased their presence in debt oriented mutual funds (including gilt and liquid funds) with the number of retail folios rising by 10.5 per cent in the past six months.

This can be attributed to investors looking at relatively safer investment options post the volatility in the domestic equity markets in 2011. This is also a good sign of penetration of debt mutual funds among retail investors.