'The outlook for the next Samvat is more constructive, as many of the earlier drags are gradually becoming supports.'
The Rs 84,000 crore domestic fund of funds (FoFs) space, which was in the doldrums over the past 18 months, has now caught the attention of investors due to a change in the tax structure in Budget 2024. The broader category, which includes offerings across equity, debt and commodities, has seen a spike in the inflows over the past two months. FoFs typically deploy the pooled capital in one or multiple MF schemes rather than investing directly into equities, debt or commodities.
'Those satisfied with returns and not expecting further rally could be booking profits and also stopping SIPs.'
HDFC MF witnessed 17% rise in investment in its schemes to Rs 6,462 crore by group companies during May.
Mutual fund houses have been on an equity buying spree in the past three months as they have invested a net amount of Rs 55,000 crore in them between January and March 2023. The number is more than double the amount deployed in the preceding three months (October to December), signalling improved valuations and favourable economic indicators. The valuations, which had peaked in October 2021, returned to its long-term average in March 2023.
New fund offers collection in the current calendar year was the highest in a decade, with 13 of the 70 equity schemes cornering 75 per cent of the amount raised.
Foreign portfolio investors (FPIs) and mutual funds (MFs) have put in more money as anchor investors in initial public offerings (IPOs) in 2021 than any other year. FPIs' share of investments for the year stood at Rs 24,477 crore, nearly six times that put in last year and more than nine times the amount invested in 2019, the data from Prime Database showed. MFs have invested Rs 12,264 crore, four times than that invested last year and more than 10 times the investment in 2019. The total investment by FPIs and MFs put together this year is five times the amount invested last year. The amount contributed by MFs, however, is nearly half of that invested by FPIs.
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.
MFs have benefited from a shift to financial assets from physical assets like real estate and gold.
Overall, the MF industry saw nearly Rs 5 trillion, or 18 per cent, of asset erosion in March, with the asset base shrinking to Rs 22.26 trillion from Rs 27.22 trillion at February-end.
This came even as the airline recorded the fastest domestic passenger growth rate of 26 per cent.
With the stock coming under pressure, the MF holding value could have dropped to Rs 50 billion, back-of-the-envelope calculations show.
Fund managers have been advising investors not to keep their return expectation higher
Experts say the impact on the schemes' NAVs may vary in the coming days, depending upon how fund houses treat the developments on VIL and whether there are any further rating downgrades or credit events.
Zee and its lenders had decided to enter into an agreement to not offload the pledged shares amid a sharp slide in the prices of the underlying securities during end-Janury. The terms give the lenders a greater say, upside benefit from the proposed strategic sale, more cover and personal guarantee.
Despite uncertain times and market volatility ahead, investors should continue with their disciplined investing via SIPs.
Given its focus on the real estate sector, financial planners feel this scheme is not meant for first-time investors and any investor should only have 5 to 10 per cent exposure to this fund.
Steep volatility in the markets has made fund managers cautious, awaiting opportunities to deploy the cash.
Most equity schemes have more than doubled their NAVs in 8 years, even if they entered at the pre-Lehman crisis peak
Most large fund houses, such as HDFC MF, ICICI Prudential AMC, Reliance MF, Reliance MF, Birla SunLife MF and SBI MF, have the backing of large banks or financial institutions, giving them reach and understanding, they say.
The majority have stayed away from getting into cash handling.
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