INSUBCONTINENT EXCLUSIVE:
MUMBAI: February wasn’t the best month for India’s mutual fund industry
Escalating tensions along the north-
western border, uncertainties about the outcome of the general elections and concerns over
mounting corporate debt prompted outflows from the nation’s favourite savings instrument.
Balanced, liquid, income and gilt funds saw
exits that overshadowed fresh investments in equity schemes and ELSS funds.
In total, the industry shed assets worth 20,083 crore in
February, taking aggregate funds under management to 23.16 lakh crore
ELSS drew investors as savers sought to meet the tax benefit deadline of March 31.
“Growth in retail participation in equity is still on
track,” said Vishal Kapoor, CEO, IDFC Asset Management Company.
Inflows into systematic investment plans (SIP) continued to be resilient,
with collections through this mode outnumbering those for January.
Inflows through SIPs touched an all-time high of 8,095 crore — 31 crore
higher than January — and the industry added 2.5 lakh SIP accounts.
Historically, about 90% of the money coming through SIPs is invested
in equity oriented schemes
Despite negative returns over the past one year in several equity mutual fund categories such as midcap and small cap, retail investors
appear to have remained patient.
“Amid the global uncertainty, tensions on the border, the liquidity tightness and credit events, the
retail investment behaviour is quite heartening,” said NS Venkatesh, CEO, AMFI.
Wealth managers believe many retail investors are now
buying SIPs after careful planning, linking investments to long-term goals
That explains their commitment.
“There is a sense of maturity among SIP investors
Retail investors have become mature and patient, and there is no knee-jerk reaction even though the markets have been weak,” said DP
Singh, executive director, SBI Mutual Fund.
However lump-sum investments into mutual funds slowed down primarily due to border tensions and
elections.
Retail assets during the month, including equity funds, balanced funds and ELSS funds, saw inflows of 4,048 crore, the lowest
since June 2016, when the industry saw inflows of 2,722 crore.
“Many high net worth investors have added money in mid and small cap funds
and are seeing negative returns from such funds
These investors want to see money made in these funds before putting more cash into equities,” said Akhil Chaturvedi, associate director,
Motilal Oswal Asset Management.
