There was no smooth surge in middle class prosperity for foreign businesses to tap into because of the Indian economy was mismanaged, argues Debashis Basu.
Among the Sensex firms, ITC, Kotak Mahindra Bank, ICICI Bank, Nestle, Axis Bank, IndusInd Bank, UltraTech Cement, Bajaj Finance, Maruti and HDFC Bank were the major laggards.
While selecting a smallcap scheme, go with one that has a good track record and a stable fund manager.
The country's six largest smallcap schemes would require more than 20 days to liquidate half of their holdings, despite most of them maintaining high cash levels and having considerable exposure to more liquid largecap stocks, stress tests conducted by fund houses reveal. For midcap funds, the time required to sell half of the assets of the top six schemes varies between seven and 34 days, according to disclosures made by asset management companies. The Securities and Exchange Board of India (Sebi) had called for such tests in the face of strong inflows into smallcap and midcap funds, despite concerns over high valuations, to keep investors better informed.
Capital markets regulator Sebi has amended norms to bring buying and selling of mutual fund units under the ambit of insider trading rules. At present, insider trading rules are applicable to dealing in securities of listed companies or those proposed to be listed, when in possession of Unpublished Price Sensitive Information (UPSI). The units of mutual funds are specifically excluded from the definition of securities under the rules.
The financial numbers for 2023-24 (FY24) of the four pure-play listed asset management companies (AMCs) have enthused the Street. All firms listed robust growth in net profit and revenue both during the January-March quarter (Q4) of FY24, as well as in full FY24. The strong performance comes amid a positive growth environment for the sector, led by tailwinds such as sharp growth in assets under management (AUM) and robust performance in equity offerings.
'For experienced and risk-taking investors, now may be the time to go all in.' 'By 'experienced and risk-taking', I refer to those who remained net buyers in equities during the early stages of the 2020 pandemic.' 'On the other hand, those who exited the markets during the pandemic may go the SIP way.'
Gold is an excellent asset class for diversification and should be included in all long-term portfolios.
Investors must adopt a balanced approach, incorporating both styles in their portfolios.
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'It makes sense to have gold in one's portfolio keeping the political and economic risks of 2024 in mind.'
'Investors should focus on largecap funds, flexicap funds, business cycle funds, or hybrid-category funds.'
The mutual fund (MF) industry had an action-packed 2023 as it tackled the scrapping of tax benefits for debt fund investors and surging flows into equity funds.
Buying and selling of exchange trade fund (ETF) units worth less than Rs 25 crore will now have to take place compulsorily on the stock exchange platform, according to a new rule which comes into effect on Tuesday. The fresh norm, which comes into being after two deferments, is aimed at boosting liquidity and reducing tracking error. At present, investors directly deal with the asset management companies (AMCs) for purchase and redemption of ETFs - passive schemes that track a particular benchmark such as the Nifty50 index.
While near-term performance is difficult to predict after a huge run-up, fund managers believe the PSU theme's prospects remain sound over the medium to long term.
'Your decisions should not be driven by your view on the market, but by your objectives, risk appetite, and time horizon.'
The improvement in the performance of actively managed mutual fund (MF) schemes is acting as a key tailwind for the nearly Rs 50 trillion industry, Kotak Institutional Equities (KIE) said in a report. The report adds that the two largest listed asset management companies (AMCs) - HDFC and Nippon India - are likely to be the biggest beneficiaries. "The industry has a solid track record of delivering alpha on 10-year returns (70-80 per cent of assets under management (AUM) beat the benchmark), with shorter duration performance also on an upswing.
Most market analysts are expecting the momentum to shift towards 'quality' and 'growth' stocks in 2024 after the outperformance of 'value' stocks over the past three years. 'Value' stocks are generally well-established companies with steady profits that are trading at a discount to what they are intrinsically worth. Companies in sectors such as commodities, industrials, commercial vehicles and public sector units (PSUs) fall in this bracket.
Opinions vary, but fund managers remain bullish.
A lot depends upon the crucial decision-making skills of the management. If you have any doubts about the management then you always have the choice of selling your shares or not buying stocks of those companies at all.
India's largest asset manager SBI Funds Management on Tuesday said they are negative on equities from a shorter-term perspective as valuations have risen above the comfort zone. "We are not positive on equities. We think valuations are expensive. "The market has gone up a lot more than the earnings have grown," said R Srinivasan, Chief Investment Officer (CIO) - Equity at SBI Mutual Fund, at the launch of asset management companies' (AMC) yearly report on the market outlook.
After a short-term blip, mutual funds (MFs) are back to adding new systematic investment plan (SIP) investors at a record high pace, which was seen during the financial year 2021-22 (FY22). During the first six months (H1) of this financial year (FY24), MFs have added a net 77 million SIP accounts compared to 56 million during the same period of FY23. The net additions this year are a tad higher than the 76.5 million additions in H1 of FY22.
The contribution from asset management companies (AMCs) has surpassed the Rs 3,000 crore target for the creation of a Rs 33,000 crore backstop facility for debt mutual funds (MFs). The initial corpus for the Corporate Debt Market Development Fund (CDMDF) is nearly Rs 3,100 crore, according to multiple government officials and AMC executives. "The fund is operational now. "The required corpus has been raised by AMCs and the remaining part (Rs 30,000 crore) is in the form of a guarantee from the government which will be activated only in case of a credit event," explained D P Singh, joint CEO and deputy MD, SBI MF.
'If rate cuts happen, bond yields will come down and investors will make mark-to-market capital gains on them.'
An improved showing of mutual funds (MFs) is helping the industry attract distribution talent at a brisk pace. The industry has onboarded a net of 11,600 individual distributors in the first seven months of 2023-24 (FY24) compared to just 5,555 distributors in the whole of 2022-23 (FY23), according to data from the Association of Mutual Funds in India. Like most financial products, MFs also have significant reliance on individual distributors to sell their products, even as digital platforms are gaining popularity.
Find out whether the fund is equity, debt, or hybrid oriented. 'Understand the portfolio composition and whether it suits your risk appetite and horizon.'
These schemes are a good choice for investors contemplating a large investment in equity funds. Instead of investing all the money in one go, they can do so in a staggered manner by parking it in these schemes and then transferring it to equity mutual funds through a systematic transfer plan.
This is a good opportunity for long-term investors to pick quality small and midcap stocks at reasonable valuations.
Despite the uncertainties created by rising bond yields and oil prices, fund managers have been proactively deploying fresh flows into the equity market. The cash available with equity fund managers, which has remained lower at around 5 per cent in the past few months, hit a 16-month low of 4.8 per cent in September, shows a Motilal Oswal Financial Services report. Cash holdings in equity schemes had topped 6 per cent in February amid subdued equity market sentiment.
Swift gains on Dalal Street this year have also led to a sharp surge in shares of equity market intermediaries like depositories, exchanges, and registrar and transfer Agents (RTAs). The stock prices of BSE, CDSL, CAMS, and KFin Technologies are up 24-283 per cent so far in 2023 when compared to a 9 per cent rise in the benchmark Nifty index. With the market buoyancy expected to keep up the pace, analysts believe these stocks are a good long-term bet despite the sharp rally, which can trigger an intermittent correction.
'A fair bit should be allocated towards fixed income.'
Investors may take a 5 to 10 per cent exposure to silver. 'Have a long-term investment horizon when investing in silver ETFs to ride out short-term market fluctuations.'
'Midcap and smallcap indices are trading in the expensive zone.'
'The deal pipeline across products is robust for 2024.'
'No human bias is involved as happens in active funds.'
The improving outlook for the power sector has caught the interest of dividend yield funds. In the first four months of the current financial year (2023-24, or FY24), five of the six largest dividend yield funds have shown a notable increase in their exposure to stocks within the power sector. Some have even introduced new stocks to their portfolios.
Inflow in equity mutual funds halved to Rs 3,240 crore in May, declining for the second consecutive month, primarily due to profit booking by investors amid rising market. However, this was also the 27th consecutive month of inflow in the equity class, which was primarily driven by fund infusion in small-cap and mid-cap categories, data released by the Association of Mutual Funds in India (Amfi) showed on Friday. Overall, the 42-player mutual fund industry continues to see inflow and attracted Rs 57,420 crore, on contributions from debt-oriented schemes.
The 2023-24 (FY24) July-September quarter (second quarter, or Q2) proved to be a mixed period for asset management companies (AMCs). While the two largest listed AMCs, HDFC and Nippon, reported robust growth in both revenue and profits, the other two, Aditya Birla Sun Life and UTI, experienced profit declines. HDFC AMC reported an 18 per cent year-on-year increase in Q2 revenue to Rs 765 crore, while Nippon's revenue rose 15 per cent to Rs 475 crore.
The net inflows into active equity mutual fund (MF) schemes registered more than a twofold month-on-month rise in August, crossing Rs 20,000 crore, the highest in five months. This rise in net inflows was boosted by an 18 per cent growth in gross investments, driven by a record Rs 15,800 crore inflow through the systematic investment plan (SIP) route and Rs 5,000 crore collected by seven new fund offers (NFOs) in the active equity space, reveals data released by the Association of Mutual Funds in India (Amfi). Moreover, redemptions moderated in August, declining by 19 per cent to Rs 24,580 crore, after staying elevated in the previous three months owing to profit booking.
In a mixed bag for HDFC Bank ahead of the parent HDFC's merger with itself, the Reserve Bank of India has declined to make exceptions on certain aspects, and has offered some leeway on others. The country's largest private sector lender, which is aiming to conclude the merger with the home finance major by July, had written to the central bank seeking certain forbearances after announcing the $40-billion merger in April last year. In an exchange filing this evening, HDFC Bank said it received a response from RBI on Thursday and also said that there are a few pending issues.
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