MF wrap: Equity fund folio helps add 6.

62 lakh investor accounts in

January; gold ETFs hit
Folios are numbers designated for individual investor accounts, though one investor can have
multiple accounts

Equity fund folio addition boosted domestic mutual fund industry, helping it register over 6.62 lakh
more investor accounts in January, Securities and Exchange Board of India (SEBI) data shows. Total
investor accounts stood at 8.1 crore in January.

Equity funds added 3.80 lakh accounts last month, taking the total equity fund folios to 4.99 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.

The Nifty-50 and Nifty-500 indices, representing the underlying equity assets, fell 0.3 percent and 1.8
percent during the review period.

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

Equity-linked savings schemes (ELSS) saw an addition of 1.74 lakh accounts due to the tax saving
season. Typically, January-March sees a slew of investors flocking to ELSS schemes who invest in
them to save taxes.

The investments made ELSS schemes are eligible for deduction under Section 80C. There is no limit
on the amount that can be invested in any of these schemes, but the tax benefit is available only for
Rs 1.5 lakh.

Equity schemes (including equity-linked savings schemes) witnessed total inflows of Rs 6,158 crore in
the last month.

Apart from equity schemes, balanced funds also added around 18,000 accounts despite the category
recorded net outflows of Rs 952 crore in January. Equity funds include pure equity, balanced and
ELSS funds.

On the debt front, interestingly, liquid funds that were beaten down the most in terms of outflows
and fall in the AUM in the last few months, saw an addition of 47,648 accounts. Despite persistent
concerns debt funds added 37,917 accounts during the review period.

As on January-end, income funds saw inflows of Rs 2,080 crore against outflow of Rs 3,407 crore in
December, according to the data on Association of Mutual Funds in India.

The entire trouble for the fund houses started after multiple defaults by Infrastructure Leasing and
Financial Services (IL&FS), came to light a few months ago and impacted debt funds that held
securities issued by it worth Rs 2,800 crore.

Gilt funds saw an increase of 2.8 percent in folios last month on an expectation of rate cut from the
Reserve Bank of India (RBI).
"Investors are looking at gilt funds as RBI is expected to continue its rate cut trajectory due to low
inflation," a fund manager from a private fund house said.

Barring gold exchange-traded funds (ETFs), all other categories of schemes witnessed an increase in
the folios. Gold ETFs category its folios contracting by 8,467 during the review period.

Folios in Folios in Net

Scheme Category
December 2018 January 2019 Change
Equity 4,99,18,207 5,02,98,561 3,80,354
ELSS 1,13,20,094 114,94,273 1,74,179
Balanced 63,91,853 64,09,710 17,857
Equity ETFs 8,59,734 8,69,495 9,761
Gold ETFs 3,27,447 3,18,980 -8,467
Income funds 97,45,123 97,83,040 37,917
Gilt 66,249 68,102 1,853
Liquid 15,57,258 16,04,906 47,648
Fund of funds investing overseas 1,21,499 1,23,020 1,521
Total 8,03,07,561 8,09,70,184 6,62,623

Source: SEBI

Money control
Published on February 23rd 2019
Stubborn mutual fund SIP flows take markets into uncharted
territory
 Equity returns have been negative in the past four months, but net inflows into equity mutual
funds have remained strong
 Mutual fund SIPs have done all of the heavy lifting in the past two months amid net outflows
from other types of investors

Historically, flows into equity mutual funds have followed a predictable pattern. Whenever the
markets are doing well, mutual fun inflows pick up and whenever one-year returns fall into negative
territory, flows dry up and even turn negative.

However, unprecedented flows into systematic investment plans (SIPs) of mutual funds have
resulted in a rewriting of history. Equity returns have been negative in the past four months.
However, net inflows into equity mutual funds remained fairly strong at ₹6,606 crore and ₹6,158
crore in the past two months.

SIP investors, with contributions of a little more than ₹8,000 crore in each of these months, did all of
the heavy lifting, while there were net outflows from other types of investors. Mutual fund SIP
investments involve monthly contributions, for which investors provide a one-time standing
instruction to their banks.

While the pace of increase in SIP flows declined, from about 52% year-on-year six months ago to
21% in January, flows remain strong and have helped support Indian equity prices, even at relatively
high valuations.

It remains to be seen at what point this set of investors will finally budge. For now, it is clear that
even a year of volatility in returns isn’t enough to unsettle SIP investors and cause them to review
their steady stream of investments in Indian equities.

Live mint
Published on February 15th2019
959 distributors manage assets of over Rs.100 crore
An analysis of distributor AUM shows that just 3% (959) distributors manage over AUM of Rs.100.

Of the total 33,150 distributors who manages AUM of at least Rs.1 crore (can be considered as
active), just 3% or 959 distributors manage AUM of over Rs.100 crore as on January 2019.

Further, 95 distributors manage AUM in excess of Rs.1000 crore and 80 distributors have assets
under advisory (AUA) between Rs.500 crore and 999 crore. Interestingly, there are quite a few
individual distributors falling in the 500+ crore category.

Close to 790 distributors manage between Rs.100 crore and Rs.499 crore.

Further analysis of distributor AUM data that covers 95% of the total industry AUM shows that close
to 3100 distributors manage assets between Rs.50 crore and Rs.99 crore.

Surprisingly, majority of active distributors i.e. 29,000 distributors manage AUA between Rs.1 crore
and 49 crore as on January 2019.

Overall, the mutual fund industry has 88,000 distributors who hold assets of minimum Rs.10 lakh.

AUA of distributors

AUM slab No of distributors

Above Rs.1000 crore 95

Rs.500 crore - 999

80
crore

RS.100 - 499 crore 784

Rs.50 crore - 99 crore 3104

Rs.1 crore - 49 crore 29091

Total 33154

Source: Industry data

Café mutual
Published on February 24th2019
Net SIP growth falls 61% in April-December

While the number of new SIP investors was more than 10 lakh per month in the early part of the
fiscal, it came down to 7.23 in December 2018.

Growth of Systematic Investment Plan (SIP) in the country's mutual fund industry fell 61 per cent in
the first nine months of the current fiscal, following a year of negative returns and the growing
uncertainty due to the upcoming elections.

From a high of 4.81 lakh net addition of SIP accounts, new SIP registered minus discontinued SIPs, in
April 2018, the net SIP registration has fallen 61 per cent to 1.87 lakh, as per the data from the
Association of Mutual Funds in India (AMFI).

The disenchantment towards SIP, a plan where investors make regular, equal payments into a
mutual fund, is being witnessed since the early part of the fiscal and, that too, both in terms of new
SIP registrations as well as in the number of discontinuations.

While the number of new SIP investors was more than 10 lakh per month in the early part of the
fiscal, it came down to 7.23 in December 2018. Similarly, number of SIP discontinuations in the fiscal
has increased from 3.99 lakh in April to 5.36 in December 2018.

"The rolling returns in the mutual fund industry across all categories has been negative in the last
one year and this has impacted both the gross inflow of investment as well as new investors to SIP,"
Viral Berawala, CIO, Essel Mutual Fund, told IANS.

As per the AMFI figures, the total new SIP account registrations in 2017-18 was 116.41 lakh and
discontinuations were 34.83 lakh. Whereas in the first nine months of current fiscal 2018-19, the
additions have been 85.16 lakh and discontinuations 42.67 lakh.

"This is due to the investors' psychology which works in the reverse order. While they should be
investing when the market is down, they are shying away. Same behaviour was witnessed in earlier
cycles in 2001, 2008 and 2011," Berawala said.

Another reason for accentuated disenchantment is the growing uncertainty in the market due to the
general elections scheduled in May. The 1.87 lakh net SIP addition in December 2018 was down
nearly 40 per cent compared to November 2018 when it was 3.14 lakh

"People also desist from investing ahead of polls due to related uncertainty. Same was the case in
2014 as well. The flows actually started improving after the results were out and continued the
upward trend for 15 months peaking in July 2015," he said.

In 2017, to improve the attractiveness of the mutual fund industry, market regulator Securities and
Exchange Board of India (SEBI) took a major decision to remove confusion among retail investors
due to the large number of schemes available to choose from.
Mutual funds is one of the preferred investment destinations among Indian investors. SEBI's strict
definitions on how mutual funds should be categorised halved the number of schemes which were
around 2,000 two years back. It has made investing simpler.

Economic times
Published on February 12th 2019