Equity MF investors stay invested in choppy markets

CHENNAI: Despite the market volatility, a majority of retail investors have stayed invested in equity mutual funds (MFs) for more than two years. Over 60% of retail investors stayed invested in equity MFs for more than two years, data with the Association of Mutual Funds in India (Amfi) showed.
This is largely out of compulsion rather than choice.Most equity MFs remained in the red during the two-year period (till October 25) with diversified funds declining by 4.6%. Only funds that invest in the defensive pharmaceuticals and FMCG sectors managed to post decent gains. The sensex and Nifty dropped 3.8% and 3.3% respectively during the period.
Of the Rs 1.4 lakh crore retail investments in equity-oriented schemes, investments to the tune of Rs 85,000 crore continued for over 24 months, Amfi data showed. This is based on the age-wise analysis of assets under management (AUM) across investor types and categories done by Amfi for the six months ending September 2012.
Interestingly, high net-worth individuals (HNIs) or those with investments of over Rs 5 lakh redeemed 60% of their portfolio in less than two years. MFs, however, lost over 16 lakh folios, a 3.5% drop in six months.
Folios or investor accounts with MFs stood at 4.48 crore at the end of September. “Most of the decline was seen in retail folios, especially in the equity category, as these were impacted by volatile market sentiments,” observers said.
Corporates continued to see an increase in their assets under management (AUM). Their share, which stood at 43% in March, increased to 46% in September. They had a 60% share in the AUM of debt-oriented funds, data compiled by ratings agency Crisil showed. They were followed by HNIs who had 25% share and retail investors who had 23% share.
Retail investors increased their investments in debt-oriented mutual funds (including gilt and liquid funds) with the number of retail folios rising by 10.5% in the past six months. “This can be attributed to investors looking at relatively safer investment options after the volatility in the domestic equity markets in 2011,” analysts tracking the sector said. “This is also a good sign of penetration of debt mutual funds among retail investors.”
Most equity MFs remained in the red during the two-year period (till Oct 25) with diversified funds declining by 4.6%
Of the Rs 1.4 lakh crore retail investments in equity-oriented schemes, investments to the tune of Rs 85,000 crore continued for over 24 months
High net-worth individuals or those with investments of over Rs 5 lakh redeemed 60% of their portfolio in less than two years