By Kushan Shah
Despite the equity markets navigating a period of turbulence, the latest data from the Association of Mutual Funds in India (Amfi) show that most of the leading fund houses (41 out of 50) have recorded an increase in their folio counts in January.
Tata Mutual Fund, Nippon India Mutual Fund and HDFC Mutual Fund reported over 1 million folio additions, while ICICI Prudential Mutual Fund and SBI Mutual Fund added about 845,000 and 427,000 folios, respectively.
Overall, the folio count increased by 7.1 million – from 263.5 million to 270.6 million – during the month under review.
Fund houses that have seen a decline in the folio count include Quant Mutual Fund, Canara Robeco Mutual Fund, Navi Mutual Fund, JM Financial Mutual Fund, PGIM India Mutual Fund, Samco Mutual Fund, HSBC Mutual Fund, Baroda BNP Paribas Mutual Fund and Choice Mutual Fund.
SIP Backbone
Saugata Chatterjee, president and chief business officer, Nippon India Mutual Fund, said the folio growth shows broadening of investor participation and a growing preference for disciplined, long-form investing. According to Chatterjee, this momentum was supported by increasing SIP adoption, improving awareness about mutual funds and sustained investor education efforts across the country. He also attributes the support of advisor and distributor partners in guiding investors through the market cycles a key factor behind increasing investor participation.
He believes consistent engagement, transparency and a strong service experience will be the key to the growth of his fund house and the overall industry.
Precious Metal Pivot
Nippon India Mutual Fund’s gold fund recorded high inflows of $911.7 million in January, aiding the folio growth.
Chokkalingam Palaniappan of Prakala Wealth, an Amfi-registered mutual fund distributor, believes that the overall penetration of mutual funds in India is low compared to other countries, paving the way for an aggressive growth in folios. The tendency of many investors to enter the market during periods of downturns to cash in on lower prices also helped boost the number.
In addition, the rally in gold and silver also contributed to the increase in investor participation in mutual funds, Palaniappan said.
While the equity markets face significant pressure due to foreign funds outflows, the continuing participation of domestic investors through mutual funds will play a key role in shaping the market’s future.