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Good run: Nearly 9 lakh debt folios added last fiscal

This was quite unlike the 44 lakh-plus folio closures seen in the equity space.

Debt funds added nearly 9 lakh folios in FY13 as robust returns in most debt categories and falling interest rates prompted investors to flock to debt schemes. This was quite unlike the 44 lakh-plus folio closures seen in the equity space.

About 8.9 lakh debt folios were added in FY13 over the year-ago period,data from industry body Amfi show. Of this,about 76%,or a little more than 6.80 lakh,folios were added in the retail category,signifying the rising interest of retail investors towards debt mutual funds. Overall,the debt assets under management (AUM) rose nearly 33% to R4.98 lakh crore in March 2013 against R3.74 lakh crore in March 2012. Debt AUM as a percentage of overall MF AUM rose to about 71% in March 2013 from 64% in March 2012. The AUM under the retail category rose 32% to R30,481 crore at the end of FY13 from R23,055 crore at the end of the previous fiscal.

“Debt funds have grown in favour because of the fall in interest rates,better awareness of debt mutual funds as well

as better returns,” said Morningstar India senior research analyst Dhruva Chatterji.

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“Mid- to long-term bond funds and FMPs,in particular,have caught the interest of retail investors.”

Within the liquid funds category,corporate folios rose by 4,932,retail folios increased by 4,215,while folios of high net worth individuals rose by 3,833 in FY13. Overall,13,080 folios were added in the liquid category in FY13. Liquid AUM for the corporates rose by R7,440 crore to R74,986 crore,while that for banks/financial institutions rose by R3,871 crore. Liquid AUM for retail remained small at R1,267 crore,but has more than doubled from R848 crore in FY12.

In the gilt category,retail folios rose the most by 25,541 followed by HNI folios,which rose by 3,193. Overall,gilt folios rose 88% to 63,027 at the end of FY13 from 33,453 in the year-ago period. Gilt AUM for corporates more than doubled to R4,967 crore in March 2013 from R2,482 crore in March 2012. Similarly,the AUM for HNIs has grown more than 2.5 times to R2,609 crore from R951 crore in the same period.

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Debt funds enjoyed a good run in FY13 as most categories gave over 9% returns in a benign interest rate environment. Gilt medium-and-long-term funds gave average category returns of a little over 11%,while income funds gave returns of about 10.5%,During FY13,the Reserve Bank of India (RBI) reduced key policy rates by 1% to 7.5%.

The 10-year benchmark yields have moved from about 8.7% to 7.8% in FY13,a decline of close to 100 bps. One-year CD rates have declined from 10-10.5% to 9.5% during the same period.

First published on: 11-05-2013 at 11:17:20 am
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