Retail chases reward over risk, equity MF folio additions hit a record in June

ET Intelligence Group: More than 4 million equity mutual fund folios, the most on record in a month, were added in June, driven by a wave of new sectoral fund launches as retail investors sought higher returns despite increased risk. The previous high of 3.6 million was recorded in February 2024. The total folio count at the end of last month was 133 million, according to data from the Association of Mutual Funds in India (AMFI). The rate of folio additions in June was nearly 1.7 times more than the average of the previous 12 months. In fact, at 20 million, the addition of new folios in the first half of 2024 was nearly 2 million more than the entire previous year.

Sectoral funds have been the primary driver of this recent market surge. Sectoral funds, which account for 14% of equity fund assets under management (AUM), added 1.9 million folios in June 2024, fuelled by the launch of 10 new offerings that attracted ₹12,947 crore in inflows. Notable among these were the Aditya Birla Quant Fund, Baroda BNP Manufacturing Fund, Kotak Special Opportunity Fund and SBI Automotive Opportunities Fund. Consequently, sectoral funds’ share of total gross inflows rose to 37.84% in June 2024, amounting to ₹30,708 crore.

Sectoral funds contributed 47% to the total monthly equity fund folio additions, marking the second consecutive month where they accounted for more than 40% of new folios.