Having lost almost Rs 100,000 crore in assets under management (AUM) in October, the mutual funds industry is feeling cheated at the hands of corporate clients it had tried so hard to attract over the past decade. It is now focusing on its unsung saviour — the small retail investor.
Nearly Rs 66,000 crore has been pulled out of debt funds lately because of institutional investors cashing out for want of liquidity. Retail investors currently constitute about 80 per cent of AUM in long-term equity funds and 5 to10 per cent in short-term liquid funds.
“The rules of the game will now change. Undoubtedly, the focus will change in favour of the retail investors,” said the head of a leading fund house who did not wish to be identified.
“We were servicing corporate customers and they became our fair-weather friends as most of them redeemed their money on fears and rumours. Retail investors, on the other hand, invested mostly in our equity schemes and even though they are down by over 50 per cent from the top levels, they are keeping confidence and giving us fresh money,” he said.
Retail investors are considered as the industry’s foundation.
“Fund houses ignored the market they are intended for and focused on big ticket clients," said Prasunjit Mukherjee, chief executive officer, Plexus Management Services.
“It is a foregone conclusion that retail investors are the foundation for the secular growth of the industry, “ said Sanjay Sinha, chief executive officer, DBS Cholamandalam Asset Management Company.
However, the industry has treated corporate clients as demi-Gods and given preferential treatment, said Surya Bhatia, a Delhi-based financial planner.
On the equity side, Rs 31,273 crore got wiped off from retail-supported equity funds in October. But compared to the benchmark Sensex fall of 25 per cent, this amounts to a loss of 18 per cent.