INSUBCONTINENT EXCLUSIVE:
A large number of blue-chip shares were available at multi-year lows after a sell-off in March last year.Retail investors are ditching
mutual funds to put money directly into stock markets, lured by soaring share prices and lacklustre returns at mutual funds in recent years
Domestic investors have withdrawn Rs 2,75,00 crore from equity mutual funds in the year to Feb
16, according to data from the Securities and Exchange Board of India (SEBI), after dumping a total of Rs 5,45,00 crore in 2020
Meanwhile, the number of 'demat' accounts, which contain retail investor holdings in securities in electronic format, increased 27 per
cent last year to stand at 49.8 million at the end of 2020."In India, something special is taking place
Retailers have taken money from domestic funds and started to buy stocks themselves
They have driven the market higher," said Herald van der Linde, head of equity strategy, Asia Pacific, at HSBC.Mutual fund redemptions vs
rising demat accountsThe rise in demat accounts comes as millennials, faced with job losses and pay cuts due to the COVID-19 pandemic,
dabble in stock markets directly to try to make some extra income while staying at home.A large number of blue-chip shares were available at
multi-year lows after a sell-off in March last year
Some of the most battered large-cap stocks, such as Reliance Industries and State Bank of India, have more than doubled in price since
March. Equity mutual funds vs Nifty 50 returns "An investor like me won't go with a mutual fund in this scenario, especially large cap
I'd prefer to invest directly," said Ashish Mishra, a retail investor based in Gurgaon
The aversion towards mutual funds is also due to their higher management fees and low returns.According to Refinitiv Lipper data, the
average return over a three-year period for the 498 mutual funds surveyed was 2 per cent, much lower than the 12 per cent return for the
NSE Nifty 50 index in that period.Biggest contributors to NSE Nifty's market value in last 1 year A polarised rally has also affected the
performance of mutual funds
The top 10 stocks by market capitalisation in the Nifty 50 index accounted for two-thirds of the price gains over the past year."Investors
who bought into stocks during the pandemic have seen gains of 30-40 per cent, so we believe this trend of investing direct versus mutual
funds will continue," said Nikhil Kamath, co-founder and chief investment officer of India's biggest stock broker Zerodha and asset
management firm True Beacon.
