Investors seem to have stayed off credit risk funds following numerous credit events, indicating a sharp decline in their risk appetite
The spill over effect of the liquidity crisis in the NBFC space that began in September last year still continues to haunt the 44-player mutual fund industry.
This is evident from the April to September folio data available on the Association of Mutual Funds in India’s website. Total number of investor folio accounts in September stood at 8.56 crore versus 8.27 crore in April, a tepid growth of 29 lakh investor accounts.
Of the total 29 lakh folio additions in H1 FY20, 21 lakh folios were added in equity funds.
However, it's not all bad news. The good news being that the industry is better off this year as during the first six months (April-September) of FY19 the industry lost 49 lakh investor folios.
Investors seem to have stayed off credit risk funds following numerous credit events, indicating a sharp decline in their risk appetite.
The trouble, which began after multiple defaults by Infrastructure Leasing & Financial Services (IL&FS), came to light in September 2018, affected schemes that held securities issued by it. These funds suffered as most fund houses had invested in troubled companies such as IL&FS, Dewan Housing Finance Corporation (DHFL) and Reliance Home Finance.
Further, the back-to-back downgrade of debt instruments by rating agencies had hurt the performance of credit risk funds, prompting investors to pull out their investments.
This is also evident from the outflows registered in this category. In the last six months, investors have pulled out a total of Rs 13,783 crore from credit risk funds.Overall, assets under management of the mutual fund industry grew 3.59 percent to 25.68 lakh crore during the review period.The Great Diwali Discount!
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