Mutual Fund Folios Rise A Record 14% Y-o-Y In FY16: CRISIL Research

Mutual funds added over 59 lakh folios, a record rise of 14% year-on-year, to take the tally to 4.77 crore in FY16, according to the data disclosed by the Association of Mutual Funds in India (AMFI). The industry added 18.10 lakh folios in the March quarter, up 3.95% over the December quarter

Retail folios lead growth
The industry upsurge was led by retail folios, which increased by 54.52 lakh, or 13.6%, to 4.54 crore in FY16. About 17.05 lakh retail folios were added in the March quarter against 12.93 lakh added in the previous quarter. They continued to account for 95% of the total folio base.

Retail investors flock to equity funds
Despite the recent volatility in the equity market, retail investors continued to pour money in equity-oriented funds. Retail folios in the segment rose by 40.28 lakh (up 13.1%) to 3.49 crore in FY16 (77% of total retail folios) despite the market, as represented by Nifty 50, closing the fiscal year down nearly 9%. The latest quarter saw addition of 12.57 lakh accounts (Table 2) – the highest since December 2014 when AMFI switched to disclosing data on a quarterly basis instead of half-yearly. Retail folios in the segment marked the sixth consecutive quarter of gains.

Among other categories, balanced funds, with higher orientation towards equity, too continued to benefit from the penchant for equity investments. The category added 4.33 lakh folios in FY16 and 1.30 lakh folios in the latest quarter to push the total count to 23.38 lakh. Meanwhile, retail debt folios crossed the 70 lakh mark, with addition of 3.26 lakh (up 4.83%) and 9.74 lakh folios (up 15.96%) in the quarter and FY16, respectively.

HNI folios cross 18 lakh
Folios held by high networth individuals (HNIs), or those investing Rs 5 lakh or more as defined by AMFI, crossed the 18 lakh mark. This category added 3.74 lakh folios in FY16 and 0.83 lakh in the March quarter to tally at 18.04 lakh (Table 3). HNIs preferred to invest mostly in equity, debt and balanced funds.

Corporates lead in AUM share
Corporates continued to dominate mutual fund assets under management (AUM) with 47% share in the March quarter (Table 4) against 48% in the December quarter. HNIs were the second biggest contributor with 29% share. The retail segment’s share was steady at 22%.

53% of retail equity AUM stays invested for over two years
Tenure-wise analysis of AUM across investor types and categories showed that 52.94% of retail AUM stayed in equity mutual funds for more than two years, lower than 54.58% in the preceding quarter and 58.46% a year ago. Of the Rs 2.19 lakh crore of retail investments in equity-oriented mutual funds, Rs 1.16 lakh crore was held for over 24 months.

In comparison, about 23.96% of HNI AUM stayed invested in equity mutual funds for more than two years, higher than 22.40% in the previous quarter.