Retail investors’ equity mutual fund assets have seen a near 30% drop in the last three years, with a fourth of retail folios getting closed.
The retail equity assets under management have come down from Rs 1.5 lakh crore as at the end of September 2010 to just over Rs 1.06 lakh crore as at end of September 2013, according to the latest Association of Mutual Funds of India (Amfi) data.
The retail folios, or number of investor accounts in equity-oriented MF schemes, too fell 25%, or 94.12 lakh accounts, in the last three years to 2.92 crore.
Experts blame it on the large redemptions from equity funds on a consistent basis since last 21 months on account of high market volatility and its inability to cross the 21K mark convincingly.
The AMFI’s data shows though the proportion of retail investors holding equity assets for more than a year has risen to a three-year high of 82.55% as at end of September 2013, in absolute terms it has fallen 17%, indicating that even long-term investors have been selling.
The proportion of short-term retail equity assets have come down from 10.05% as at end of March 2013 to 8.42% at the end of September 2013, indicating low amount of fresh investments.
“The older investors have been booking profits every time markets rise substantially and new investors are reluctant to invest at the current levels,” said a CEO of a domestic MF.
Meanwhile, the retail investors’ interest towards debt funds is rising with number of debt folios increasing nearly 42% to 53.30 lakh in the last three years.
“People have started to differentiate between better performing fund managers and the laggards, with churn towards the former. Also, older investors who are now recovering their money may take a fresh view once things stabilise,” said a head of another foreign mutual fund.