Over 85 per cent of SIP AUM, or Rs 5.8 trillion, is in equity schemes, compared to just Rs 6,100 crore in debt.
Experts say the trend is worrying as it could take a toll on the pace of equity flows and also hinder the penetration drive of the Rs 24-trillion MF industry.
The stock market regulator's definition of large, mid, and small-cap companies has irked mutual fund managers, reports Samie Modak.
Over the past 25 years the MF industry has come a long way. Geographic reach has increased, many more customers have been added, more channels have been opened up and the product basket is full.
'The shadow banks are currently facing a liquidity and solvency crisis.' 'The danger is that it could potentially engulf the entire financial system because shadow banks have borrowed huge amount of money from banks, mutual funds, pension funds, and insurance companies.'
Mukesh Ambani's Jio Financial Services (JFS) is set to seek shareholders' approval for its leasing subsidiary to acquire telecom equipment and devices worth Rs 36,000 crore ($4.33 billion) from Reliance Retail. Jio Leasing Services Limited (JLSL), a wholly-owned subsidiary of JFS, plans to enter the device leasing business, and the equipment will be deployed in broadband wireless connectivity and other services.
Monthly systematic investment plan (SIP) flows into India have held steady above Rs 13,000 crore in 2022-23 (FY23) in the face of markets delivering muted returns in 18 months. However, it is not a rose-tinted view when it comes to viewing new SIP registrations and the cessation of existing ones. The ratio of SIPs stopped as a percentage of fresh SIPs registered (called SIP stoppage or closure ratio in industry parlance) stood at 56 per cent in the first 11 months of FY23, compared with 41 per cent during the same period of 2021-22 (FY22).
Some of the money pulled out of mutual funds and the secondary market is coming back via public issues.
Gross inflows into active equity mutual fund (MF) schemes dipped 34 per cent month-on-month (MoM) -- to Rs 25,400 crore -- in April as investors applied brakes on lump sum investments amid a sharp upwards movement in the market. Gross inflows for March stood at Rs 38,641 crore. The sharp decline pulled the net inflows to a five-month low of Rs 6,480 crore, shows data released by the Association of Mutual Funds in India (Amfi).
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.
Fund managers's compensation is largely tied to the assets they manage and scheme performance.
The spike in volatility may not have impacted equity inflows, but it has weighed on new investors coming via the systematic investment plan (SIP) route. In May, 1.97 million new SIPs got registered - nearly 15 per cent lower than the previous five-month average of 2.3 million - reveals the data provided by the Association of Mutual Funds in India. Since June 2021, new SIP registrations have been upwards of 2 million each calendar month. The new SIP tally in May was the lowest in 12 months.
Net investments in active equity mutual fund (MF) schemes rose to Rs 7,300 crore in December after declining to a 21-month low of Rs 2,260 crore in November, shows the latest data from the Association of Mutual Funds in India (Amfi). The rebound in net inflows was driven by a surge in investments and moderation in redemptions. While the inflows into these schemes rose 5 per cent month-on-month (MoM) in December, the redemptions were 14 per cent lower compared to November.
'Debt mutual funds are a good option now because interest rates are coming down.' 'Retail investors must put a majority portion of your money in short-term debt funds (1 to 3 years) and only a small portion in actively managed dynamic funds.'
The Mutual Fund Identification Number (MIN), mandatory for investments above Rs 50,000 in mutual funds, is likely to stay, even though the month-old confusion over it continues.
This will allow investors the freedom of choice based on the services they get from a distributor.
There are just 10 mn MF investors compared to 60 mn homes with life insurance.
Treat silver as part of the procyclical or growth assets in your portfolio, advises Sanjay Kumar Singh.
Senior officials in the MF industry say while the finance ministry and regulators communicate regularly, this is one of the very few instances in many years where an issue between the two has come out into the open.
While the proposed new tax regime is optional for taxpayers, the finance minister has said the government eventually wants to do away with all exemptions with a lower tax-rate simplified structure.
Market watchers believe that the change in guidelines fly in the face of some of the recent initiatives taken by the government, such as easing norms for foreign portfolio investors.
Experts believe the new norms may be an indirect way for Sebi to apply the brakes on dividend option plans in MFs.
Fund managers may end up losing out on crucial information during market hours, leading to information asymmetry vis-a-vis other institutional investors such as alternative investment funds, insurance players, or foreign portfolio investors.
Last year ended on a positive note in terms of investment in the domestic equity mutual funds; thanks to a rise in the equity markets during the month of December.
Tata Mutual Fund's 'own a piece of India' offering is suitable for informed investors.
Sebi has taken note of mis-selling in the financial sector and is planning to regulate the distributors, the only unregulated part of the MF industry.
The rally in the equity markets in the second half of 2023 has led to a sharp surge in the cutoff for stocks to qualify as largecaps and midcaps. On the latest list put out by the Association of Mutual Funds in India (Amfi), the smallest largecap stock now has a market capitalisation (m-cap) of Rs 67,000 crore, 35 per cent higher than in July 2023. In the case of midcaps, the cutoff has surged 26 per cent to Rs 22,000 crore.
Mutual fund is an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets.
An additional factor spurring the FMP launches is MFs' desire to retain investors as many such offerings are set to mature over the next two months.
With India's market capitalisation surpassing the $3-trillion mark, stocks across the board are adding heft. The upper limit for qualifying as a mid-cap stock -under the Securities and Exchange Board of India's (Sebi's) definition for mutual fund reclassification - has hit an all-time high of $5.4 billion. In 2013, amid the taper tantrum sell-off, it had dropped to just $1 billion, shows an analysis done by ICICI Securities.
'The idea is to invest where there is opportunity.'
Commodity investments can help you diversify your portfolio in asset classes other than equity and debt, says Dwaipayan Bose.
Omkeshwar Singh, Head, Rank MF, a mutual fund investment platform, answers your queries.
The main purpose of the meeting is to assess their views on reforms that are required to attract long-term capital into the country.
In August, the Reserve Bank of India Governor Shaktikanta Das held a meeting with chief executive officers/ managing directors (CEOs/ MDs) of large non-banking financial corporations (NBFCs). The discussions included diversifying borrowing sources for NBFCs and housing finance companies (HFCs) to contain increasing reliance on bank borrowing, risks associated with high credit growth in retail segment in unsecured loans, prioritising IT upgrades and cyber-security, improving provisioning, monitoring of stressed exposures and slippages, ensuring robust liquidity and asset-liability management, ensuring transparency in pricing, creating robust grievance redress mechanisms.
Amid lowering of bank deposit rates and falling yields from traditional investment vehicles like gold and real estate, investors are fast shifting to financial assets. The MF sector is emerging a clear beneficiary of this trend.
Geopolitical tensions in different parts of the globe and slowdown in global economy led investors to opt for safe-haven like gold over the last one year.
The governor made it clear that the RBI is aware of what's happening and acts accordingly, but doesn't make a noise about that, points out Tamal Bandyopadhyay.
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