With the interest rate cut cycle nearing its end, several debt fund managers are shifting their focus towards interest income rather than betting on duration in anticipation of capital gains.
The equity market's recent downturn appears unlikely to slow the brisk pace of mutual fund (MF) scheme launches, at least in the coming weeks. Last month, fund houses introduced 21 new equity schemes, with another five launches already lined up for November. The number of filing with markets regulator, Securities and Exchange Board of India (Sebi), suggests this momentum will continue with asset management companies (AMCs) seeking approval for 21 more equity schemes in October.
Retail investors now own a bigger slice of smallcap companies than at the start of 2023-24 (FY24), underscoring their growing conviction about investing in this red-hot space. Data from Capitaline shows mutual funds' (MFs') average holding in the National Stock Exchange Nifty Smallcap 250 rising to 9.26 per cent from 8.67 per cent during the first six months of FY24, with the number of companies with over 20 per cent MF holdings increasing from 24 to 28. In comparison, MF holdings in Nifty50 companies have gone up only marginally, from 9.67 per cent to 9.75 per cent.
Systematic investment plans (SIPs) of mutual funds (MFs) have seen a spike in demand with new registrations touching a five-year high already this year. Around 19.5 million new SIPs have been registered till December end, as against 14.1 million in the whole of financial year 2020-21 (FY21). Market participants say increasing investor awareness and positive experiences have spurred this increase.
Mutual funds' average cash holdings in equity schemes topped 6 per cent in February as fund managers went slow on deployment of new inflows on expectations of better buying opportunities amid uncertainties in the market.
Investors who cannot manage an asset-allocated portfolio or rebalance regularly, or do not have an advisor, may opt for these funds, but only after a detailed study of their strategy, suggests Sanjay Kumar Singh.
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