Mutual funds add 5.3 lakh folios in June

The mutual fund industry opened 5.30 lakh new folios in June, taking the overall folio count to 8.37 lakh crore, despite payment defaults in the debt market.

In June, too, the mutual fund industry added a similar number of accounts. In May, MFs added five lakh folio accounts.

The defaults did have an impact though while it led to a fall in investor accounts of credit risk funds. But, the increase in equity funds propped up the overall numbers.

According to data on the Securities and Exchange Board of India (SEBI), credit funds witnessed the highest drop of 10,158 investor accounts in June, followed by medium duration funds and low duration fund that together lost nearly 10,000 folios in the same month.

Credit-risk funds are debt funds that have at least 65 percent of investments in less than AA-rated paper.

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Investors seem to have stayed off credit risk funds, following numerous credit events, indicating a sharp decline in their risk appetite.

Last 10 months have seen default by IL&FS group companies, rating downgrades of Dewan Housing Finance (DHFL) to “default”, a set of downgrades for multiple companies of Reliance ADAG Group and deadlock over the resolution of mutual funds’ exposure to Essel Group firms.

In June, the average AUM of credit risk funds stood at Rs 74,607 crore compared with Rs 77,685 crore a month ago, according to SEBI data.

Under the income/debt categories, the highest number of folios was added in liquid funds. With 80,517 new folios in June, the total folio count in liquid funds rose to 15.74 lakh from 14.93 lakh.

On the equity front, all categories of equity funds registered an addition in investor folios in June, barring dividend yield and contra funds.

Large-cap funds added the most number of folios, followed by multi-cap funds in June. Large-cap funds added 1.26 lakh new folios while multi-cap funds added 1.03 lakh new folios during the month under review.

Fund managers claim the highest addition of folios in large-cap equity funds to positive equity markets.

Political stability, lower inflation and hopes of earnings growth fuelled equity fund folios.

In June, the assets under management of the mutual fund industry stood at Rs 25.49 lakh crore compared with Rs 25.43 lakh crore at the end of May, as per AMFI data.