Boosted by strong participation from retail investors, the number of mutual fund folios grew by a staggering 1.37 crore in 2017 to an all-time high of 6.65 crore. This comes following an addition of 70 lakh mutual fund investor accounts in 2016.
Folios are numbers designated to individual investor accounts, though one investor can have multiple accounts. According to data from the Securities and Exchange Board of India, based on total investor accounts with 42 active fund houses, the number of folios rose to a record 6.65 crore at the end of December from 5.28 crore in 2016.
"We are witnessing additions in folio numbers mainly on the back of new folios added to the equity and balanced categories,” said Harsha Upadhyaya, chief investment officer at Kotak Mutual Fund. "Continuous investor awareness initiatives by Asset Management Companies (AMCs) and regulatory bodies are helping to enhance financial awareness, which in turn is driving this growth," he added.
Retail investor accounts -- defined by folios in equity, equity-linked saving schemes (ELSS) and balanced categories -- grew by 1.24 crore to more than 5.46 crore during the period under review.
The one “unique and heartening” feature of the mutual fund industry’s growth has been the rise in the number of folios, according to Franklin Templeton Investments president Sanjay Sapre. “This shows that we are reaching a larger percentage of the population and while we still have a long way to go in terms of penetration, I believe this broader participation in mutual funds lends sustainability to the long term growth of the industry.”
Overall, mutual funds have seen an infusion of Rs 2 lakh crore, while equity and ELSS alone attracted an impressive inflow of over Rs 1.5 lakh crore. Over the last few years, they have proven to be a low-cost, compliant and transparent way to channelise savings towards financial investments.