MF industry lost 33 lakh investor accounts in FY '14

Mutual funds lost about 33 lakh investors, measured in terms of individual accounts or folios, in the last financial year, 2013-14, primarily on account of volatility in equity market.

It was the fifth consecutive year of loss of folios by mutual funds (MF).

Folios are numbers designated to individual investor accounts, although one investor can have multiple folios.

According to market regulator Sebi's data, on total investor accounts with 44 fund houses, the number of folios fell to around 3.95 crore at the end of 2013-14, from 4.28 crore in the last fiscal (2012-13) - a decline of 33 lakh new investor accounts.

In the past five financial years till 2013-14, the MF industry had lost more than 88 lakh investor accounts.

Equity market volatility

MF sector, which held 4.75 crore folios at the end of financial year 2008-09, saw an increase of 3.66 lakh new investors account to 4.8 crore in 2009-10.

However, later the number of folios continued to witness a southward trend and tumbled to 3.95 crore during the past financial year.

Giving the reason for such massive fall in retail folios, Axis AMC National Sales Head Karan Datta said that volatility in equity market had prompted investors to exit.

"The sharp decline in retail folios was mainly in the equity category which was impacted by volatility," he added. He noted said that every year mutual funds have been quitting.

During 2013-14, the number of investor folios for equity schemes fell by 40 lakh. The total number of folios in equity funds were 2.92 crore by the end of 2013-14, as against 3.31 crore by the preceding fiscal.

According to Sebi data, the total number of folios in debt funds rose by about 7.28 lakh to 68.67 lakh at the end of March 2013.

Balanced schemes, which invest in equity and debt category, gained 10,824 folios to end at 26.13 lakh during the last financial year.

However, exchange traded funds saw a drop of 34,773 folios to 7.04 lakh investor accounts at the end of March this year.

At the end of February, the sector offered a total of 1,538 schemes to investors, of which 353 were equity schemes and 1,089 were debt-linked schemes.