The last 6 months were particularly tough for the mutual fund industry as indicated by the number of folio closures witnessed in the period.
Mutual funds (MFs) lost aove 7 lakh folios (1.5%) during the 6 months ended March 2012 to end with 4.64 crore folios, according to industry body AMFI (Association of Mutual Funds in India).
For the year ended March 2012, the industry lost about 7.8 lakh folios or 1.7%, indicating that the number of folio closures rose substantially during the past 6 months.
The retail category was the biggest loser in terms of folios, especially in equity funds. This was mainly because of the volatile movement of the equity market. Between October & December, the benchmark BSE Sensex declined 5.4%, but rose 6.4% between October& March, thanks to the surge in FII inflows in the early part of 2012.
The domestic banks / financial institutions category also witnessed a decline of 77% in folios during year ending March 2012 mainly due to RBI’s recent circular restricting bank investment in mutual funds to 10% of their net-worth from January 2012.
However, the good news for the industry is that 61% of retail investors have stayed invested in equity mutual funds for above 2 years. Out of the Rs. 1.34 lakh crore of retail investment in equity mutual funds, Rs. 82,577 crore was not withdrawn for over 2 years.
Retail investors increased their presence in debt-oriented mutual funds, including gilt & liquid funds with the number of retail folios rising by 6.1% & 13.8% in the last 6 months and 12 months respectively.
The year ended March 2012 saw 718 FMPs (Fixed maturity Plans) new fund offers (NFOs), amounting to Rs. 1.17 lakh crore.
In terms of AUM, the retail category accounted for 6.15% of total debt AUM in March 2012, up from 4.8% in September 2011 & 5% in March 2011.
The financial year 2011-12, liquid, ultra short term and short term debt funds gave returns of 9.1%, 9.36% & 9.44%, respectively.
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