Investors flock to mutual funds in October despite volatility, slowdown jitters

Despite the volatility in the equity market and worries over the economic slowdown, the mutual fund industry in October added the highest number of folios in three months.

The mutual fund industry added 6 lakh investor accounts in October, taking the total tally to 8.62 crore, according to the data released by Association of Mutual Funds in India on November 9.

In comparison, the industry had added 3.45 lakh new folios in September and 4.8 lakh folios in August.

Folios are numbers designated to individual investor accounts. An investor can have multiple folios.

Overall, mutual fund schemes witnessed a net inflow of Rs 1.33 lakh crore last month as compared to an outflow of Rs 1.51 lakh crore in September. The inflows helped the asset base of the MF industry grow by almost 7.5 percent on month taking the total AUM to Rs 26.32 lakh crore.

“While there has been some volatility, there are two factors that give new investors confidence. One, even amidst the erratic news flow, the market has been able to bounce back to make new highs,” Gaurav Rastogi, CEO, Kuvera, an online platform for mutual fund investments, said.

“Two, investor confidence follows the markets cycle, and we are seeing huge interest in new investors looking to participate in the equity markets through mutual funds,” Rastogi added.

According to data from AMFI, the number of folios with 44 fund houses rose to 8.62 crore at the end of October, from 8.56 crore at the end of September, registering a gain of 6 lakh folios.

Market experts said the addition of folios suggests that investors were undeterred by the market volatility. Besides, it indicates their understanding of the market risks associated with mutual fund schemes.

Meanwhile, amid intermittent bouts of volatility, BSE's benchmark Sensex rose 3.6 percent last month.

The number of folios under the income/debt category went up to 57.89 lakh folios in October from to 56.79 lakh in September.

The folios in equity and equity-linked saving schemes rose by 3 lakh to 6.03 crore at October-end as compared to 6 crore at the end of the preceding month.