Mutual fund equity folio count rose by 20 lakh during Apr-Feb FY15

Equity mutual funds witnessed an addition of 20 lakh investor accounts or folios during the April-February period of the current 2014-15 financial year on account of a sharp rally in stock markets.

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

According to latest data on investor accounts with 45 fund houses, the number of equity folios rose to 3.14 crore in February, from 2.94 crore during the full 2013-14 financial year, registering a gain of 20 lakh folios.

April saw the first rise in folio count in more than four years. Prior to that, the equity mutual fund (MF) sector had seen a continuous closure of folios since March 2009 after the market crashed in late 2008 due to the global financial crisis.

Since March 2009, the sector has seen a closure of 1.5 crore folios. The investor-base reached its peak of 4.11 crore in March 2009, while it stood at 3.77 crore in March 2008.

Industry experts said a strong rally in equity markets and the consequent rise in investors' interest led to a sharp increase in retail folios.

Since early 2014, stock market sentiment took a positive turn, which generated significant interest from overseas investors. This was mainly on account of expectations from the new Prime Minister Narendra Modi-led government at the centre, leading to equity markets adopting a bullish tone.

"Besides, the growth in equity markets has been noticed by retail investors and since May 2014, we have seen month-on-month positive net sales in equity mutual funds," an expert said.

Folio count has been increasing, especially in the country's smaller towns - known as beyond-15 cities (B15) - with total number of retail folios in such cities recently overtaking the number of folios from T-15 (top 15) cities for the first time, the expert added.

The addition in equity folios is in line with the benchmark Bombay Stock Exchange (BSE) index Sensex surging by 31 per cent in the 11-month period under review.

Moreover, the mutual fund industry reported net inflows of over Rs 61,000 crore in equity funds in April-February period, which helped the industry grow its folio count.

Overall, industry's retail folios surged to 4.2 crore at February-end 2015, from 4.05 crore at end of March.