With a booming stock market and a lack of better options to park money, retail investors continued to opt for mutual fund investments in May, show the data from the Association of Mutual Funds in India (AMFI). The equity funds reported a record monthly addition of 10.98 lakh portfolios in May. It was three times the two-year monthly average of 3.81 lakh additions.
“A sizable addition from digital platforms and a record high market with little volatility have attracted retail investors” said NS Venkatesh, chief executive at AMFI. The interest from the B30 and T30 cities in the incremental folio addition was equally distributed, he added.
It was the third month in a row when equity folio addition was higher than the long-term average. Over the past three months, equity funds added 27.39 lakh new folios. With a share of 18.7%, the sectoral funds category dominated the new additions followed by the midcap funds with 13.7% share and flexicap funds with 12.2% share.
The inflow in equity funds has also improved in tandem. The net inflow in these schemes was at a 14-month high of Rs 10,082 crore in May. The gross purchase-to-redemption ratio rose to 1.65 compared with the 12-month average of 0.97. The average investment per equity folio touched Rs1.58 lakh in May 2021 compared with Rs 1.02 lakh a year ago.
A sales head of a leading domestic fund house said that investors are lured by impressive trailing returns by mutual funds amid limited investment opportunities.
The total folio tally of themutual fund industry has crossed 10 crore. Of this, 6.75 crore folios are in the pure equity schemes while the remaining are in the debt, hybrid, and other schemes.