Equity assets of mutual fund industry lowest in seven years

This was in period when Indian equities,as gauged by benchmark BSE Sensex,rose nearly 63.

Equity assets as a percentage of overall assets managed by the mutual fund industry has fallen to its lowest level in the past seven financial years. This was in a period when Indian equities,as gauged by the benchmark BSE Sensex,rose nearly 63.

The proportion of equity assets have declined from 38 at the end of March 2007,when Indian equities were almost at the peak of their bull run,to about 26 at the end of FY13,according to data collated from ICRA Online.

This is despite the fact that equity assets grew about 47 from R1.17 lakh crore to R1.73 lakh crore in the same period. Debt assets,on the other hand,have grown much faster,posting a mammoth 161 jump in assets to R4.88 lakh crore at the end of March 2013 from R1.86 lakh crore in March 2007

Investments into equity mutual funds have been under pressure throughout FY13,despite the 8 gains made by the benchmark BSE Sensex during the period.

Equity MF schemes saw outflows of R12931 crore in FY13,including nine consecutive months of outflows from June to February. Outflows gained pace post September last year as the market rallied to new highs.

Highest outflows were seen in the months of September R3,306 crore followed by January R2,501 crore and August R2,096 crore.

That8217;s not all. More than 44 lakh equity folios closed in financial year 2013,the most in the last nine fiscals.

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The month of December alone saw the closure of more than six lakh equity folios,the most in FY13.

Market participants said that the continued uncertainty in the equity market spooked investors even as the brief rally between September and December last year prompted long term investors to book small profits or cut their losses and exit the equity market altogether.

Retail investors,especially those who invested in 2007 or early 2008,have lost confidence in equities.

HNIs,on the other hand,have turned to debt because of the benign interst rate scenario, said Sunil Subramaniam,executive director sales amp; marketing,Sundaram MF.