The volatility in stock market has forced mutual fund retail investors to stay invested for the long term.
Retail investors' share in asset under management (AUM) of equity schemes with maturity of more than two years of retail investors has risen to 62% at the end of March 2012 from 46% at the end of March 2009.
According to the data of Association of Mutual Funds in India (AMFI), the AUM of equity schemes having maturity of more than two years grew to Rs. 82,577 crore at the end of March 2012 from Rs. 35,152 crore in March 2009."Retail investors are invested for long because they do not have temptation to book profit due to weak market condition," said V Ramesh, deputy chief executive officer, AMFI. "Before 2008-09, stock market was bullish and most of the investor had temptation and opportunity to book profit."
Stock market had witnessed bullish phase from 2005 to the start of 2008. Sensex gained around 42% in 2005, 46% in 2006 and 47% in 2007. But since 2008 onwards stock market is volatile giving less opportunity to investors to exit.
Unlike retail investors, high networth individuals (HNIs), which are individuals investing R5 lakh and above, did not stay for long in equity schemes and pulled out money even during the volatility.
As per the data, the share of AUM of HNIs in equity schemes grew by36% (R10,203 crore) at the end of March 2009 to 40% (Rs. 17,013 crore) at the end of March 2012.
"Usually HNIs are first to exit the market as they act on the advice of wealth managers, whereas retail investors are usually not equipped with advice of wealth managers and are stuck for a longer period," said Debasish Mallick, managing director and chief executive officer, IDBI Asset Management.