Mutual Funds
Equity MFs witness exodus of nearly Rs15,000 crore and 45 lakh folios in FY12-13

There were just two months in FY12-13 where equity mutual fund scheme inflows were positive. Heavy outflows over the previous months led to the highest outflows for a particular financial year

After nine months of consecutive net outflows, equity mutual fund witness a positive net inflow of Rs768 crore in March on the back of lower redemptions and higher sales of tax-saving schemes. Despite the positive inflows into equity schemes coming in the last month of the financial year, the year FY12-13 saw the highest outflows, which was as high as Rs14,766 crore. The last time equity schemes witnessed such a massive outflow was in FY10-11 where the net outflow reached Rs13,139 crore. In FY11-12, equity schemes witnessed an inflow of Rs122 crore. Despite a slew of reforms brought in by the regulator to increase retail participation in mutual fund schemes, the new reforms seem to have had little effect on the net inflows. Sales have been decreasing year-on-year for the past two years. Total sales in FY12-13 amounted to Rs43,364 crore, down nearly 35% from FY10-11 when total sales touched Rs66,592 crore.

 

Moneylife has constantly been highlighting the huge decline in folios over the past few months as well. The month of March once again saw an exodus of over two lakh folios. The total number of equity folios declined by over eight lakh in the last quarter of the FY12-13. At the end of FY11-12 the total number of equity folios stood at 3.76 crore, and since then the number of folios have declined by over 45 lakh to 3.32 crore as on 31 March 2013.

 

Equity mutual fund schemes, after a net outflow of over Rs1,500 crore over the past nine months, finally saw a month of positive net inflows.  Sales of equity schemes touched Rs4,226 crore in March 2013, significantly higher compared to February 2013, where sales touched Rs3,713 crore. Equity linked savings schemes (ELSSs) which contributed 14% to the total equity mutual fund scheme sales, peaked to Rs596 crore, the highest sales for a month for the past in two years. Sales of tax-saving schemes usually peak in the last quarter of the financial year, the quarter sales improved compared to the same quarter last year. A new tax-saving avenue was opened up for first time investors in the form of Rajiv Gandhi Equity Savings Schemes (RGESSs). The six schemes that were launched during this period brought in Rs242 crore.

 

The introduction of direct plans seemed to have had some positive impact in equity fund flows. In January 2013, the direct route bought in Rs114 crore to equity schemes, contributing as much as 9% to the total equity inflows, according to a recent report from Karvy Computershare (Read: Mutual fund direct plans bring in significant inflows during the first month of launch). This was significantly higher compared to the month of December 2012 when there was no incentive to invest through the direct route. Just 3% of the contributions came from the direct route in December 2012, which was a total of Rs32.88 crore.




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COMMENTS

CA PRADEEP AGARWAL

4 years ago

It was to happen FII brought funds when dollar was at a high and rupee at the lowest, and cashed when market was high and dollar had subsided quite a bit, thereby earning both ways in which I feel politicians played a pretty good role.

CA PRADEEP AGARWAL

4 years ago

Frankly if you see it what has equity market given, but, it has actually taken back much more what was given, through others

REPLY

Suiketu Shah

In Reply to CA PRADEEP AGARWAL 4 years ago

Absolutely sir.Fraudulent agents are the root cause of investors running away from the mutual fund market.Look at the headlines of moneylife.in today.It speaks for itself.

MF agents shd spend time and effort in rectifying their fraudulent colleagues in their industry rather than calling investors ungrateful.

jobjneroth

4 years ago

This is a result of the regular dose of SEBI regulations on Mutual Funds, and advisors. With no one to advise them on Mutual funds, and the asset class itself becoming increasingly more regulated and inaccessible to the general public - it was only a matter of time before investors ran away.
I believe that increased awareness campaigns by AMFI, along with encouragement of good advisors can only reverse this trend.

REPLY

Nilesh KAMERKAR

In Reply to jobjneroth 4 years ago

The least people can do is to acknowledge (forget encouraging) the good advice of some of the advisers.

But, it is only human to be ungrateful.

Suiketu Shah

4 years ago

The only way to save the mutual fund industry from dying is by encouraging investors in every which way to invest direct and making this more and more easier.As long as MF agents wl be involved ,the industry is facing a one way road which wl meet a dead end.

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WPI inflation slides to 3-year low of 5.96% in March

The decline in inflation and a slowdown in industrial output growth to 0.6% in February have raised expectations of a rate cut by the RBI next month to boost growth

 
A fall in prices of vegetables pulled down the headline inflation to over three-year low of 5.96% in March, which may prompt the Reserve Bank of India (RBI) to consider a rate cut in its annual monetary policy next month. 
 
Inflation based on the Wholesale Price Index (WPI) stood at 6.84% in February and 7.69% in March, 2012, government data showed. 
 
The 5.96% March-end inflation is much lower than Reserve Bank's projection of 6.8%. 
 
The decline in inflation and a slowdown in industrial output growth to 0.6% in February have raised expectations of a rate cut by RBI next month to boost growth. The RBI will announce its annual monetary policy on 3rd May. 
 
As per official data released today, inflation in the manufactured items category witnessed a marginal decline at 4.07% in March from 4.51% in February. 
 
Inflation in food articles category, which has a 14.34% share in the WPI basket, too declined to 8.73% from 11.38% in the previous month. 
 
The easing in food inflation was helped by a sharp drop in prices of vegetables. Inflation in vegetables stood (-)0.95% in March, from 12.11% in the previous month. 
 
The rate of price rise in onion stood at 94.85% for the month of March, as against the inflation rate of 154.33% in February. 
 
Inflation in rice eased to 17.90% in March against 18.84% in the previous month. 
 
Inflation for January was revised upwards to 7.31%, from 6.62% as per provisional estimates.

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