Rise of Retail Investors in Debt Funds, Gold ETFs in FY12

Thursday, April 26, 2012
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Mumbai: The number of retail investors opting to invest in debt oriented funds and gold ETFs went up during the last fiscal as equity market remained subdued, a Crisil report said.

"Retail investors increased their presence in debt-oriented mutual funds (including gilt and liquid funds) with the number of retail folios rising by 6.1 percent and 13.8 percent in the past six months and one year respectively. This could be attributed to investors looking at alternate asset classes post the sharp downfall in the domestic equity markets in 2011," the report said.

The report also said rising interest rate may be another reason for investment in debt oriented mutual fund categories, especially fixed maturity plans by retail investors. As per the data released by the Association of Mutual Funds in India (AMFI), the contribution of retail category rose to 6.15 percent of the total debt AUM (Asset Under Management) in March 2012 from 5 percent reported in March 2011. The data also point out that there is rising interest in the gold Exchange Trade Funds (ETFs).

"Retail investors mopped up gold Exchange Traded Funds (ETFs) on a large scale in the past year. The number of folios in this segment grew by 61 percent over a one year period ending March 2012 and 11 percent in the past six months. The number of Gold ETF folios increased from 2.86 lakh to 4.60 lakh over the past one year till March 2012," the report said, adding the rising gold prices over the year on the back of volatility in the equity markets and risk aversion globally was one of the contributing factors.

The report also notes that contrary to perception of rising redemption in the MF industry, especially in equity funds, as much as 61 percent of retail investors have stayed invested in equity MFs for more than two years. Out of the 1.34 lakh crore of retail investment in equity MFs, as many as 82,577 crore were not withdrawn for over 24 months, the report said. However, it further said the MF industry lost over 7 lakh folios (1.5 percent) over the past six months ending March, 2012 to end at 4.64 crore folios.

Source: PTI
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