- Date : 07/08/2018
- Read: 3 mins
More than 8 lakh folios have been added to mutual funds, steering the total to an all-time high and testifying the growing inclination for mutual funds among investors. Read on to know how does it affect your financial decisions.
A growing inclination for mutual funds (MFs) among investors has led to a rise in the number of folios by more than 8 lakh in the span of a month to reach Rs. 7.22 crore, an unsurpassed high, at the end of April 2018.
This took place after 1.6 crore investor accounts were added during 2017-2018. In contrast, 2016-2017 saw over 67 lakh folios and 2015-2016 saw 59 lakh.
A folio is a number that is assigned to an individual investor’s account. However, an individual can have numerous accounts as well.
A mutual fund is an investment vehicle that consists of funds that are brought together through a large group of investors, which are then invested into different avenues such as bonds, stocks, money market instruments, etc.
As per data collected from the Association of Mutual Funds in India (AMFI) from 42 fund houses on their total investor accounts, it was found that at the end of April 2018, the number of folios reached an all-time high of 7,21,85,970, up from 7,13,47,301 during March 2018. This is an increase of 8.38 lakh.
Related: How mutual funds work?
The last few years have seen a steady increase in investor accounts subsequent to prosperous offerings from retail investors, those from small towns, and large equity scheme inflows.
Equity-linked saving schemes (ELSS) folios grew to 5.43 crore, a growth of 7.35 lakh. Furthermore, folios in the balanced category rose to 60 lakh, with a surge of 1 lakh.
Along with the ups, there were some downs – the ETF and income fund folio category saw a decline.
Harsh Jain, COO, Groww (an investment platform) said that in April, after nearly two months of volatility, the market saw consistent recovery. So the new financial year’s positive commencement seems to have boosted the confidence of new investors. Also, the introduction of long-term capital gains (LTCG) tax had caused a slowdown in February and March.
“The increase in new folios in April suggests that new investors have overcome their fears and realised that mutual funds still remain one of the most promising and flexible investment products for the long term,” said Jain.
According to Viral Berawala, CIO, Essel Mutual Fund, throughout history April has been a month that’s weak for financial savings. But of late, both advisors and fund houses are working toward decreasing this ‘seasonality’.
Overall, the infusion toward mutual funds has been Rs 1.4 lakh crore, while the inflow that ELSS and equity attracted amounted to Rs 12,400 crore. With this, the total assets under management (AUM) have risen from Rs 21.36 lakh crore in March to Rs 23.25 lakh crore at the end of April.