The equity mutual fund industry saw, its second largest grossing month in July with a net of ₹37,113 crore; net inflows into the sector resided at ₹17,739 crore. This was seen at the 41st month in a row of POS inflows signifying the theme that retail investors are still enamored with equity mutual funds. Nevertheless, this figure indicates an 8 percent reduction from the earlier figure that demonstrated the health status of males in the United States. stimulus from June numbers, indicating a slightly decelerated rate of growth.
While on the whole, FY17 witnessed a decline in equity investments, investors’ craze for systematic investment plans or SIPs remained unabated. The Mutual Fund Industry saw record gross inflows into SIPs in July at ₹23,332 crore which indicates a month-on-month growth of nearly 10%, surpassing the previous month’s figures and as per data available with the Association of Mutual Funds in India (Amfi). The number of accounts using SIP also ramped up to an unimaginable high of 9. The total subscription for the IPO was 34 crore which shows that there has been an improved discipline in terms of finances among the retail investors.
Mutual Funds: Retail investment strategies cannot be complete without a company that occupies a corner of the market.
Equity mutual funds have surely shown fruitful consistency in the past forty-one months and thus become a significant component of the investment portfolio of the retail investor. Looking at the growing SIP contributions, Chalasani said,” The SIP figures being the highest seen this year only depict the improved savings attitude among the service sector investors who seen mutual funds as their part of savings portfolio. ”
Melvyn Santarita, an analyst at Morningstar Investment Research India, said that while earlier the threat of a coalition-led government was seen to pose a problem for India, this view slowly faded. “As a result of the government’s consistent objective in the promotion of growth and development-led framework, the earlier concerns have been eased,” he said.
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New Fund Offers or NFOs and preferences to a particular sector
Out of ₹37,113 crore total Equity inflows, ₹16,565 crore was credited to the newly launched Mutual Funds as much of them invested in 15 NFOs floated in July alone. Sectoral and thematic funds remained to dominate this flow by directly taking slightly above half of the total fresh equity investments.
Thus, most of the equity funds’ categories demonstrated a lower level of net inflows compared to June. The fund ordering was hardest for large-cap and mid-cap funds which recorded a 31% percent and 35 % decrease respectively. However, the flows into the small-cap category somewhat declined by 6F. 8% month-on-month.
Swarup Mohanty, Vice Chairman and CEO at Mirae Asset Investment Managers (India) noted that while indeed there has been a two-year straight increase in SIP in small-cap funds, this number is already on a declining trend. Speaking on the trends, Mr. Kanvin concluded by stating his observation that, Investors seem to be moving their funds into the sector and it begs the question whether this change is a result of moving risk profile or whether it is just the tussle for short-term gains.
Some of the areas of mutual funds that have attracted investors include
Thus, although a generic trend of the reduction in equity has been observed, diversified fund categories, laden mainly in large and mid-cap stocks, flexi-cap funds, and value funds have received higher amounts of fund inflow during July alone. Compliments to the long-running market, the issue of overselling in the segments, especially mid- and small-cap has been ringing. There could be a flight to the quality, where investors might prefer large-cap segments that seem cheaper than others, he said.
Hybrid and Debt Funds regaining attention or Strong interest towards Hybrid and Debt Funds
Despite having less flow of money in July than in June, equity mutual funds still commanded investors’ attention, though at a slower pace than in the previous month, Hybrid and debt-oriented funds, however, received much attention. Investment in hybrid funds saw an increase in July with the amount more than doubling to stand at ₹17,436. 09 crore. Income debt funds also posted a major reversal during the period under discussion, receiving ₹1. Two trillion as opposed to the previous outflows of ₹1. It rose to $ 7 trillion by the end of June from $ 5. 88 trillion that was recorded at the end of May.
This change in investors’ stance to dive into hybrid and debt funds shows that they are now looking to change their diversified investments for diversification, especially when the issue of overvaluation of equities is arising. The strong flows into these segments reveal investors’ ability to transform their operations to suit new conditions.
Conclusion: The dynamics in the investment environment
The July inflow data portray that the environment of investment in India has not remained static only. Although fresh fund inflows into equity mutual funds have come off the record high, the steady increase in SIP investments as well as the rising interest in hybrid and debt funds indicate the changing trend among the investors. With continuously evolving market dynamics, investors’ preparedness and the overall enhanced discipline towards finances contributed by the investors will decide the path of the mutual fund industry.
This article is intended as a reference for understanding current trends in equity mutual fund investments incorporating information that may be useful for the improvement in the understanding of the Indian Mutual Fund market for those investors interested.
