Equity mutual fund folio additions hit record 5.4 million in July

Monthly addition of equity mutual fund folios reached a record 5.4 million in July, according to the data from the Association of Mutual Funds in India (AMFI). This surge was driven by the launch of new sectoral funds, leading to inflows of nearly ₹10,000 crore. The number of newly added folios in July is almost three times higher than the monthly average of 1.8 million over the past two years.

Sectoral funds contributed nearly half of the incremental folios in July with inflows of ₹9,790 crore. This boost was attributed to the new fund offers (NFOs) of the Edelweiss Business Cycle Fund and the ICICI Prudential Energy Opportunities Fund.

A new fund offer by mutual funds often results in a significant increase in the folio count. A single investor may hold multiple folios for different schemes of an asset management company (AMC). An increase in folio count without a corresponding rise in unique investors indicates that existing investors are increasing their equity allocations by subscribing to new fund offers.

With a record addition in July, the total folio count reached 138 million, pushing investment per folio to a record ₹2.1 lakh on an overall equity fund basis compared with ₹1.8 lakh a year ago. The highest investment per folio was ₹3.1 lakh for dividend yield funds, followed by ₹2.9 lakh for focused funds and ₹2.7 lakh for flexicap funds.

Sectoral funds accounted for 18% of the total outstanding equity folios in India, followed by 15.1% for smallcap funds, 11.9% for ELSS, and the remainder for other equity funds.