Mutual Fund sees record inflows

Mumbai: The mutual fund industry has added a record 77.4 lakh folios in FY17 taking its total count to 5.54 crore as increasing number of investors from smaller towns are preferring the mutual fund route to gain exposure to the securities market.

After witnessing a steep decline in investors folio post 2008 global financial market crisis, the industry started witnessing fresh growth in the number of folios only since September 2014 when the equity markets were in the midst of a bull market rally amidst hope that the new government at the centre would end policy paralysis, initiate more reforms and pull the domestic economy out of slowdown.   

The number of mutual fund folios saw a steady decline from 4.76 crore as at the end of March 2009 to 3.95 crore in March 2014 as investors made heavy redemptions following high bout of volatility and lacklustre growth in equity market returns.

However, the slide got arrested in 2014 following an impressive rally in equity markets with most of the small investors preferring the systematic investment plan (SIP) route to invest in equity markets.

According to the Association of Mutual Funds in India (AMFI), the assets under management of the industry saw a significant growth of 42 per cent in FY17 to Rs 17.5 lakh crore from Rs 12.3 lakh crore in March 2016.

“In FY17, total inflow in equity category has been Rs 70,367 crore with net inflows in every month. Retail participation in the equity category is high because of the popularity of the Systematic Investment Plan (SIP) route.

“According to AMFI, the mutual fund industry added about 6.2 lakh SIP accounts every month on an average during FY2017 (till February 2017), with an average ticket size of Rs 3,100 per account,” rating agency Icra noted.   

The sharp growth in AUM was largely driven by inflows from smaller towns and cities. Assets from beyond top fifteen cities increased from Rs 2.13 lakh crore in February 2016 to Rs 3.07 lakh crore in February 2017, a growth of 44 per cent as against 26 per cent growth registered by the industry as a whole during the same period.  

A survey conducted by the Securities and Exchange Board of India (Sebi) showed that 42 per cent of the mutual fund investors are regular investors while 60 per cent of them preferred the SIP mode to make investment in capital markets.