Mutual Funds

MF wrap: Equity fund folio helps add 6.62 lakh investor accounts in January; gold ETFs hit

Equity fund folio addition boosted domestic mutual fund industry, helping it register over 6.62 lakh more investor accounts in January, Securities and Exchange Board of India (SEBI) data shows. Total investor accounts stood at 8.1 crore in January.

Equity funds added 3.80 lakh accounts last month, taking the total equity fund folios to 4.99 crore.

Fund managers attributed the addition in equity fund folios to the matured behaviour of retail investors who were seeing the market fall as an opportunity to invest their surplus money.

The Nifty-50 and Nifty-500 indices, representing the underlying equity assets, fell 0.3 percent and 1.8 percent during the review period.

Folios are numbers designated for individual investor accounts, though one investor can have multiple accounts.

Equity-linked savings schemes (ELSS) saw an addition of 1.74 lakh accounts due to the tax saving season. Typically, January-March sees a slew of investors flocking to ELSS schemes who invest in them to save taxes.

The investments made ELSS schemes are eligible for deduction under Section 80C. There is no limit on the amount that can be invested in any of these schemes, but the tax benefit is available only for Rs 1.5 lakh.

Equity schemes (including equity-linked savings schemes) witnessed total inflows of Rs 6,158 crore in the last month.

Apart from equity schemes, balanced funds also added around 18,000 accounts despite the category recorded net outflows of Rs 952 crore in January. Equity funds include pure equity, balanced and ELSS funds.

On the debt front, interestingly, liquid funds that were beaten down the most in terms of outflows and fall in the AUM in the last few months, saw an addition of 47,648 accounts. Despite persistent concerns debt funds added 37,917 accounts during the review period.

As on January-end, income funds saw inflows of Rs 2,080 crore against outflow of Rs 3,407 crore in December, according to the data on Association of Mutual Funds in India.

The entire trouble for the fund houses started after multiple defaults by Infrastructure Leasing and Financial Services (IL&FS), came to light a few months ago and impacted debt funds that held securities issued by it worth Rs 2,800 crore.

Gilt funds saw an increase of 2.8 percent in folios last month on an expectation of rate cut from the Reserve Bank of India (RBI).

“Investors are looking at gilt funds as RBI is expected to continue its rate cut trajectory due to low inflation,” a fund manager from a private fund house said.

Barring gold exchange-traded funds (ETFs), all other categories of schemes witnessed an increase in the folios. Gold ETFs category its folios contracting by 8,467 during the review period.

Scheme Category Folios in December 2018 Folios in January 2019 Net Change
Equity 4,99,18,207 5,02,98,561 3,80,354
ELSS 1,13,20,094 114,94,273 1,74,179
Balanced 63,91,853 64,09,710 17,857
Equity ETFs 8,59,734 8,69,495 9,761
Gold ETFs 3,27,447 3,18,980 -8,467
Income funds 97,45,123 97,83,040 37,917
Gilt 66,249 68,102 1,853
Liquid 15,57,258 16,04,906 47,648
Fund of funds investing overseas 1,21,499 1,23,020 1,521
Total 8,03,07,561 8,09,70,184 6,62,623

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