How many folios did MF industry add in February?

Equity fund folio addition has boosted domestic mutual fund industry helping it register over 8.22 lakh more investor accounts in February. As per SEBI data, total investor accounts stand at 8.18 crore in February.

Equity funds (including equity linked savings scheme and balanced funds) that account for almost 66 percent of total folio growth added 5.39 lakh accounts last month, taking the total equity fund folios to 6.87 crore.

Fund managers attributed the addition in equity fund folios to the matured behaviour of retail investors who were seeing the market fall as an opportunity to invest their surplus money.

In February, the Sensex and Nifty shed 1.1 percent and 0.4 percent, respectively. Asset managers said the decline can be attributed to fading equity outlook, market volatility and weak global cues.

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Folios are numbers designated for individual investor accounts, though one investor can have multiple accounts.

The addition comes even though the AUM of the 43-member-strong MF industry has been almost flat at Rs 23.16 lakh crore as at February-end.

Interestingly, liquid funds that were beaten down the most in terms of outflows and fall in the AUM during September saw an addition in of 44,504 accounts, while debt funds folios fell 89,705 during the review period.
Cash plans, or liquid schemes, reported the highest outflows across all MF categories. This category registered outflows of over Rs 24,509 crore in February as against an inflow of Rs 58,637 crore in January.

Companies normally park their money in liquid schemes to meet their short-term needs instead of keeping their money idle in a non-interest bearing current account. Since liquid plans do not levy any entry or exit fee, they facilitate easy cash management.

Income funds too saw outflows of Rs 4,214 crore in February. Debt fund investors are still shying away from making investments after the recent crisis at IL&FS affected these schemes.

The trouble, which began after multiple defaults by Infrastructure Leasing & Financial Services (IL&FS), came to light a few months back, affected debt funds that held securities issued by it.