Seven Out of Ten Equity Mutual Funds Declined in Past One Year : AMFI

Many mutual fund investors have either redeemed or stopped putting new money in equity mutual funds because of lackluster capital markets and under performance of funds.

According to the industry body, Association of Mutual Funds in India (AMFI), 16 lakh investor folios have been closed in the past one year. Equity funds, irrespective of their size and lineage have witnessed outflows in the last financial year. Some large equity funds have lost 5-15% of their assets over the past one year.

According to the CEO of Taurus Mutual Fund, people who had invested in 2008 and 2009 are seeking profits now. Before August, investors stopped investing in mutual funds as they were not expecting the market to perform well this year.

According to the CEO of IDBI Mutual Fund, redemption has been higher over the past two months where investors exited for every rise in the markets.

The industry sources said that, equity funds are not being able to retain existing investors and SIPs have grown higher in most fund houses but they are not able to retain big-ticket investors. According to AMFI data, there was a closure of 39,000 folios and Rs 3,700 crore drop in assets of HNI. It is observed that, most equity funds outperform benchmark only after the market rally in September when indices obtained more than 8% returns. But most of the large cap funds failed to beat CNX nifty.

According to S&P, 53% of these funds underperformed their benchmarks over 5-year period and 53% underperformed their benchmarks over 1-year period. There has been a lot of asset allocation where most investors have shifted their investments to debt funds and gold EFTS.

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