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Mutual fund folios jump to record 7 crore
Driven by strong participation from retail investors, mutual fund (MF) houses have registered an addition of 1.6 crore investor accounts in 2017-18, taking the total tally to over seven crore.
This follows an addition of over 67 lakh folios in 2016-17 and 59 lakh in 2015-16.
Folios are numbers designated to individual investor accounts, though an investor can have multiple accounts.
According to the data from the Association of Mutual Funds in India (Amfi) on total investor accounts with 42 fund houses, the number of folios rose to a record 7,13,47,301 at the end of March this year, from 5,53,99,631 at the end of March 2017, a gain of 1.59 crore.
Over the last few years, investor accounts have increased following robust contribution from retail investors, especially from smaller towns, and huge inflows in equity schemes.
Harsh Jain, COO at Groww, an online mutual fund investment platform, attributed the impressive performance to investor awareness campaign by the industry, role played by mutual fund distribution platforms, demonetisation effect and strong retail participation from retail investors, especially from smaller towns.
Besides, investors are now shifting from traditional asset classes such as real estate and gold to financial asset class, he added.
Retail investor accounts -- defined by folios in equity, equity-linked saving schemes (ELSS) and balanced categories -- grew by over 1.5 crore to 5.94 crore during the period under review.
Overall, mutual funds have seen an infusion of Rs 2.72 lakh crore, while equity and ELSS alone attracted an impressive inflow of around Rs 1.7 lakh crore.
This inflow has helped in increasing the total assets under management by 26 per cent to Rs 23.05 lakh crore at the end of the previous fiscal from Rs 18.30 lakh crore at the end of March 2017.
Mutual funds are investment vehicles made up of a pool of funds collected from a large number of investors. The funds are invested in stocks, bonds and money market instruments, among others.
Use SIPs to invest in equity linked savings schemes
Many investors invest in tax-planning funds towards the end of the financial year by making a lumpsum investment. This financial year, distributors are asking such investors to spread their tax-saving investments across the year by opting for systematic investment plans (SIP) in ELSS.
Can one do a SIP in an ELSS?
ELSS is a type of diversified equity mutual fund which is qualified for tax exemption. Investors can do a SIP in such funds. The SIP is a specific amount, invested for a continuous period at regular intervals, generally on a monthly basis. It allows the investor to buy units of the scheme at a pre-decided frequency. One can participate in the stock market without trying to time it. It also brings discipline to your investments. Investors can opt for the growth plan or the dividend plan.
When will the ELSS SIP start?
Investors can fill out a form along with the SIP mandate and register it. Then, submit it to the fund house. It takes 21-30 days for the bank to register your mandate.
What tenure should the SIP be for?
The SIP should be for tenure of at least a year. If you began later in the year, then you could make up for the missed installments by paying a lumpsum. Fund houses stipulate a minimum time frame of six months for the SIP. Investors can do an SIP for any time period namely one year, three years or even opt for the perpetual option.
What is the advantage of SIP in an ELSS fund?
SIP or staggered investments in an ELSS fund avoids last-minute rush and helps spread their investments through the year. Investments up to ₹1,50,000 per financial year can be claimed as deductions.
How long will investments be locked in?
In case of an ELSS SIP, every installment will be locked for three years. Suppose, you start a SIP of ₹10,000 per month on May 1, 2017 for one year. The first installment will be locked till April 2020, while the second installment will be locked till May 2020 and so on.
Can I add a lump sum to my SIP later in the year?
You can add a lumpsum amount to the same scheme in which you are running an SIP. So if you are running a ₹10,000 per month SIP and wish to add ₹30,000 to the scheme in which you are running a SIP, you can do so by filling the additional purchase form. The SIP continues to run as it is.
Equity mutual funds log Rs12, 400 crore inflow in April, push AUM to Rs8 trillion
The strong inflow has pushed the asset base of equity mutual funds by more than 6% to Rs8 trillion at the end of April from Rs7.5 trillion in the preceding month
Overall, mutual funds schemes witnessed an inflow of Rs1.4 trillion last month as compared to redemptions of Rs50, 752 crore in March due to new tax on long-term equity gains.
New Delhi: Investors have pumped in a staggering over Rs12, 400 crore in equity mutual funds in April, driving the assets under management to a record Rs8trillion.
This is much higher than over Rs6, 650 crore inflow seen in such schemes in March, according to the data from the Association of Mutual Funds in India (Amfi). The strong inflow has pushed the asset base of equity mutual funds (MFs) by more than 6% to Rs8 trillion at the end of April from Rs7.5 trillion in the preceding month.
“At the start of April, markets had corrected, which would have led to investments by some value conscious mutual fund investors.
“Also, March is seasonally a tight month due to investors utilising money towards payment of insurance premia. Lastly, there were NFO’s in April which provided fresh investment opportunities,”
Echoing similar views, Vidya Bala, head of mutual fund research at ‎FundsIndia.com said: “March saw higher outflow in equity as a result of which net flows reduced. The decline in stock market and fear of long term capital gain tax (LTCG) also may have led to some outflows. Finally, the dust appears to have settled down in April and the month has seen higher net inflow”.
Overall, mutual fund schemes witnessed an inflow of Rs1.4 trillion last month as compared to redemptions of Rs50,752 crore in March due to new tax on long-term equity gains.
Of this, equity and equity-linked saving schemes saw an inflow of Rs12,409 crore during the period under review, the data showed. Besides, liquid funds or money market category—with investments in cash assets such as treasury bills, certificates of deposit and commercial paper for shorter horizon—witnessed an infusion of over Rs1.16 trillion.
In contrast, a net sum of Rs436 crore and Rs54 crore was pulled out from gilt and gold exchange traded fund (ETF) respectively.
The assets base of the MF industry, comprising 42 players, increased to Rs23.25 trillion from Rs21.36 trillion. Mutual funds are investment vehicles made up of a pool of funds collected from a large number of investors. The funds are invested in stocks, bonds and money market instruments, among others.
Paytm gets SEBI approval to sell direct mutual fund plans
Financial services platform Paytm today said its wholly-owned subsidiary, Paytm Money, has received approval of market regulator SEBI to become a registered Investment Advisor.
The nod from the Securities and Exchange Board of India will allow the company to roll out investment and wealth management products to consumers across the country, Paytm said in a statement.
"Paytm Money is currently completing integrations with the respective compliance and regulatory authorities for KYC under the SEBI regulations. It is also integrating all leading AMCs (Asset Management Companies) in India," the statement added.
The platform has planned a limited rollout of investment products, starting with direct plan mutual funds’ investments with zero commissions. The company will have a separate app available for both Android and iOS users.
"We are committed in our mission to make Wealth Management easier and more accessible for the masses. The SEBI approval to our request for an Investment Adviser license puts us on track for our planned launch date of April," Paytm Money Senior Vice President Pravin Jadhav said.
Brokers like PSU bank stocks, but mutual fund managers continue to avoid
There are more buy ratings for most-tracked PSU banks, with the exception of fraud-hit PNB, now than when the bank recapitalization plan was announced in October
Of all the listed state-run banks, only three—IDBI Bank Ltd, Indian Bank and SBI—have logged gains since the recapitalisation announcement was made on 24 October. Photo: Mint
Fund managers are refusing to load up on stocks of state-run banks even at beaten down valuations, frustrated by their weak balance sheets and structural problems, although analysts appear to be a tad more confident about them, if buy ratings are anything to go by.
There are more buy ratings for most-tracked Indian state-run banks, with the exception of fraud-hit Punjab National Bank (PNB) now, than there were a week after the bank recapitalization plan was announced in October, data from Bloomberg showed.
Even the government’s record Rs2.11-trillion plan provided little incentive for fund managers to buy into these stocks as structural issues such as asset quality problems, inability to attract and motivate right talent, continue to ail the sector.
“In the PSU (public sector undertaking) banking sector—there are two structural problems. The compensation of top management which makes it difficult to attract and motivate talent, and external influence in the decision making, that has led to asset-related problems,” said Nilesh Shah, managing director of Kotak Mahindra Asset Management Co. Ltd.
The ratings as of 1 November were considered for comparison, to capture brokerage views post the recapitalisation announcement on 24 October.
Top lender State Bank of India (SBI) was the most-tracked bank with 49 analysts covering the stock. It had 83.7% buy or outperform ratings of the total ratings, compared with 77.3% on 1 November.
Following next was Bank of Baroda, which had 75% buy or outperform ratings, compared with 58.1% on 1 November.
On 14 February, PNB said it had discovered a fraud of Rs11,400 crore, and later revised to Rs12,636 crore.
PNB’s stock has slumped 37.5% since the fraud was made public earlier this month. It touched a 20-month low of Rs92 on Tuesday.
The recent $2 billion fraud at PNB was another negative, though fund managers said they weren’t surprised given the basic issues these banks grapple with.
Shah said he has been underweight on PSU banks relatively, but not at a complete zero.
“They are a trading opportunity and not an investment opportunity. They cannot be ignored though as they are part of the indices,” said Shah. “There has not been much change our stance since the PNB scam got public. It did not come as a surprise.”
SBI was the only state-run bank among top 10 holdings in the large-cap space of mutual funds at the end of January, data from Morningstar Inc. showed. There were no state-run banks in the top 10 small- and mid-cap holdings of the fund houses.
However, asset quality is a haunting worry for SBI too. It reported a net loss of Rs2,416 crore for the fiscal third quarter after setting aside funds to cover rising bad loans and losses on its bond portfolio.
“I had never changed my stance on PSU Banks, and have no exposure to it,” said Ajay Bodke, chief executive and chief portfolio manager at brokerage Prabhudas Lilladher Pvt. Ltd. The recap plan didn’t change that, as it was more of an emergency measure to address the symptoms but underlying causes needed a far wider toolkit.
Bodke said the recap plan needed to be followed by many structural reforms like increased autonomy in hiring talent, strengthening credit appraisal skills by enhancing domain expertise, bringing about an attitudinal change in employees like their private sector counterparts by focusing on sales and marketing rather than relying on walk-ins and above all by expediting rapid consolidation in the fragmented state-run space.
“It brings to the front all the core issues that PSUs are facing,” Bodke said on the PNB fraud.
Of all the listed state-run banks, only three—IDBI Bank Ltd, Indian Bank and SBI—have logged gains since the recapitalisation announcement was made on 24 October.
In comparison, BSE Bankex and Sensex rose 3.76% and 4.41%, respectively.
MFs see value in these midcaps with revenue growth visibility
The 5 per cent drop in BSE Midcap index provided an opportunity to fund managers to up their holdings in select midcap stocks. They lapped up companies which represented not only value theme but also had high visibility of revenue growth in the next two to three years. Here are five prominent names which attracted fund managers’ attention in February.
BUYER: HDFC Mutual Fund | CMP (Rs): 229 | Market cap (Rs): 14,353 crore
Among the consumer electrical companies, Crompton Consumer has a dominant market share in fans, residential pumps and consumer lighting. The company is in a favourable position as it is expected to benefit from reforms announced by the government. These include housing for all, increasing electrification and gain in the share of organised players after the implementation of the GST. The company has gained market share in premium segments of fans and lighting which is also expected to enhance its operating margins in the next two to three years. Interestingly, considering FY19 and FY20 earnings, the company is trading at 10-20 per cent discount to its peers. With forecast of 25 per cent compounded annual growth rate between FY18 and FY21, the company is best suited to generate superior returns and cashflows.
BUYER: Franklin Templeton Mutual fund | CMP (Rs): 1,044 | Market cap (Rs): 28,373 crore
Colgate lost its market share in the toothpaste segment by 420 basis points from 57.6 per cent in the first quarter of FY16. Stiff competition from peers such as Dabur and Patanjali impacted its market share considerably which resulted in a fall of 7.5 per cent in its share price. To deal with the competition, the company launched Swarna Vedshakti brand in Ayurvedic segment in the southern and western regions. It has gained 2-3 per cent market share in some locations. The company plans to launch this Ayurvedic brand pan-India. Sector experts believe that there would not be a further fall (bottomed out) in market share for Colgate in the toothpaste segment after demonetisation and GST implementation. Given this, fund managers have enhance their exposure in the stock.
BUYER: HDFC Mutual Fund | CMP (Rs): 978 | Market cap (Rs): 13,375 crore
One of the key factors which have worked in favour of construction company Dilip Buildcon is its superior execution. Besides this, the company has robust order book which is quite diversified geographically. The company’s order book of Rs12,400 crore is spread across Maharashtra, Uttar Pradesh and Madhya Pradesh, which form 60 per cent of its total order book while remaining 40 per cent of its order book covers nine states. The company’s order book gives revenue visibility for the next two to three years. With the government’s focus on infrastructure projects such as Bharatmala and other state projects, among the construction companies, Dilip Buildcon with its lean balance sheet is placed well in terms of grabbing good share of these roads projects.
BUYER: Aditya Birla SL Mutual Fund| CMP (Rs): 125 | Market cap (Rs): 7,496 crore
NCC showed considerable improvement in its order book for the nine months of FY18. It had order inflows of Rs21,614 crore taking its order book to Rs31,627 crore. This order book gives revenue visibility for the next two to three years for the company. The company is in sweet spot after the bifurcation of Andhra Pradesh. It would be one of the key beneficiaries from irrigation and roads projects. Besides this, the company’s successful Qualified Institutional Placement (QIP) worth of Rs550 crore also helped it reduce its net debt to equity to 0.4 (FY18 estimated) from 0.43 as of FY17.
BUYER: Aditya Birla SL Mutual Fund & SBI Mutual Fund | CMP (Rs) : 677 | Market cap (Rs): 8,536 crore
Analysts believe the worst is over for IPCA and they expect re-approval of facilities for oral and API plants with the management inviting USFDA to revisit the three facilities, which are banned to export drugs to the US. Over the last three years, the company has completed remediation work, which includes re-modelling of facilities and deployed three consultants for the same to get going. The company is seeing a recovery in key verticals namely US generics, API formulations, Indian formulation and international tenders in non-WHO markets.
Underutilisation of facilities related to the US and anti-malaria drugs will give operating leverage, leading to faster growth of margins.
Experts advise against rush to pick up mid & smallcaps
Mumbai: Mid- and small-cap shares have taken the maximum beating during the recent stock market selloff, with many stocks in the BSE MidCap index having fallen by as much as 36 per cent since February. The cuts have been deeper in the universe that forms the small-cap index, with stocks tumbling by even 78 per cent.
In such circumstances, investors looking to take advantage of a market correction, which was induced by local and global factors, may be tempted to dabble in these segments, hoping that these are value picks. But is the worst really over?
Market experts reckon that factors which contributed to the market correction from the peak levels — elevated bond yields in the US and India, the banking fraud at Punjab National Bank, and global trade war fears — still remain. The Sensex has corrected 7.1 per cent from its January 29 peak of 36,443.98 because of these factors.
The carnage in the mid- and smallcap space has been steeper. The BSE mid-cap index is down 11.5 per cent from its January 9 all-time high of 18,321.37, while BSE small-cap index is down 12.7 per cent from its record high of 20,183.45 hit on January 15.
Bank of India, Adani Power, Union Bank of India, Canara Bank, GTL Infrastructure, Electrosteel Steels and KSK Energy Ventures have been the worst performers in the BSE mid cap and small cap indices with a fall of 29-49 per cent since February. Companyspecific reasons have pulled down Gitanjali GemsBSE -4.79 % even more than these stocks — by almost 76 per cent in the same period.
But even after this steep corrections, the valuations are far from being cheap. “Valuations are rich on absolute and relative basis. The correction was a small one after a big rally and not a significant decline,” said Gautam Chhaochharia, head of India research at UBS.
The BSE mid-cap and small-cap indices gained 48.6 per cent and 59.6 per cent, respectively, in 2017, compared with Sensex’s 27.9 per cent gains. The BSE mid cap and small cap indices are trading at P/E of 39.08 times and 114.00 times on a trailing basis, according to BSE’s website, compared with Sensex trailing P/E of 23.40 times.
The impact of long-term capital gains tax on equity, which was introduced in the Union Budget on February 1, is also likely to be felt in the coming days in the broader market, dragging it down further.
“There could be some selling before the financial year ends as investors may want to sell before LTCG tax comes into effect even though the grandfathering is done up to January 31, 2017,” said Mahesh Patil, co-chief investment officer at Aditya Birla Sun Life Mutual Fund.
There could be a silver lining for mid-caps in particular as buying due to Sebi’s directive to mutual funds to group their schemes under largecaps, mid-caps and small-caps as per market capitalisation of the stocks that the scheme has invested in. As realignment is taking place at a slow pace, brokerage CLSA sees buying support of up to $1.2 billion in midcaps. However, others argued that this won’t make much of a difference if market sentiment remains weak.
“If markets see time correction, mid-caps may correct more. There could be 15-20 per cent more downside in mid-cap stocks,” said Piyush Garg, CIO at ICICI Securities. Garg believes that a further sustained decline in markets could even rattle the domestic flows, which have been the backbone of last year’s midcap rally. “If markets don’t do well, it is possible that flows may reverse. This will affect the mid-caps more,” said Garg.
However, money managers do advise taking selective exposure to mid- and small-caps.
Patil of Aditya Birla Sun Life MF is bullish on mid-cap construction companies as order inflow has improved significantly in the past few months, as well as mid-cap consumer durables will benefit from GST and rising income levels.
Sanjiv Bhasin, executive VPmarkets and corporate affairs at IIFL, said one can buy select construction, consumption and capex expansion related stocks.
Tips from top fund managers for investing in equities
In a conversation with Nikunj Dalmia of ET Now, Nilesh Shah, MD, Kotak AMC, Navneet Munot, CIO, SBI Mutual Fund and Tushar Pradhan, CIO, HSBC Global AMC, discuss the guidelines for investing in equities.
I am not looking at stock market tips but tips for investing. How should one invest in 2018 when markets are not very high and also not very low? There is an event risk which could be politics, crude prices going higher and in general, other asset classes are not doing very well.
Nilesh Shah: Your investment will be the same in 2017 as well as 2018 as well as 2019. Just because the pitch has changed, you do not end up changing your technique. So Virat Kohli was successful in Indian cricket pitch playing righty; now in South Africa, you do not go and start playing lefty! Looking at the success of Bhuvneshwar Kumar, Virat Kohli cannot think that I will start bowling because the pitch is more favourable. You have to follow your basic technique. What you are good at it, keep on doing it
For any investor, to make long-term wealth, three ingredients are necessary. One is long-term investment. There is a proverb which says that utavale amba na pake (If you want mango, you have to wait for 12 years). If God cannot create mango before 12 years, then who are we to create long-term wealth in a short period of time?
The second one is regular investment. You have to invest at every level of market. You have to invest in every cycle of market to make money.
The third is asset allocation. Like in our diet, we have balance between soup, salad, dessert and the main course, you have to create a balanced diet for yourself in financial health which is debt, equity, commodity and currency. If you follow these three basic principles, long-term investment, regular investment and asset allocation, then you will always create long-term wealth.
That is a great answer that always balance your meal but what do you start with? Traditionally, you start with soup. What in equity, should we start with?
Nilesh Shah: It depends. If a young kid, you can afford to start with dessert also but if you are suffering from cholesterol and blood pressure and diabetes, then you might as well start with soup and salad and do not even look at dessert. So, look at your constitution and not at the neighbour’s constitution
Everything comes at a price and the advantage for equity was that for a long-term investor there was no price, patience was the only thing which you had to have. But now there is a 10% tax. When we started Nivesh India 3, I would make an open case that there are only two things constant in life -- death and taxes. But if you are an equity investor, you do not pay taxes. Now because of this 10% tax, what changes for an investor who is thinking long term.
Navneet Munot: I do not think that it dramatically changes anything. It is bringing maybe equity not at par, but still there is a substantial tax benefit in owning equity for long term. Everybody knows the price as Warren Buffett says very few people know the value and the entire game is about understanding the difference between the value and the price.
Sitting in this NSE building, that ticker in front of me shows ITC, Kotak Bank, L&T, M&M, Maruti, NMDC. Because the price is down, it does not mean that they are shipping less number of cars or they are producing less amount of power today. These short-term sentiments get driven by lot of things -- investor psychology, liquidity or news flow. But the value of these companies are not changing based on what the ticker is saying.
I think understanding that difference is very, very important. Focus on the value. Of course, the price do not get swayed by the volatility of the ticker but actually take advantage of it and the easiest way to take advantage of it is SIP. I find it quite interesting. Me and Nilesh bhai were discussing just few minutes before because markets are down 10% from the peak where we were in the middle of January.
I meet some of the investors in forums like this and they say SIP band kar de day abhi, bazaar gir raha hai (The market is falling. Should we close the SIPS?). The whole reason you started SIP was to take advantage of moments like this. If markets were going up every month by 1%, you do not want to average it up, you want to average it down. When the prices are down, you get more units and that is where the discipline, the focus in long-term investing comes back.
It is easier said than done that you focus on long term and you will create wealth; but a) the basic nature of investing is changing. Five-seven years ago, I never thought that Facebook would have a market cap of $500-600 billion. Apple had just started to breakout. Nokia was the market leader and Blackberry was like the dominant mobile phone market holder. How can one talk about long term when do not know what is going to happen in next one month?
Tushar Pradhan: That is a very interesting question because generally people associate long-term investing with staying invested in one stock for the long term that may not work for most stocks. Actually, there are only a few stocks which actually compound over that period on their own. It is better to always have a portfolio approach and the best way to actually make that portfolio approach is buy a fund because what you are doing is constantly evaluating what is the estimated profit growth for that company in the near to the intermediate future.
If you think that the trend is changing, for example if there was a big movement in terms of how mobile phones actually started being used, then the market for say a Blackberry was going to get really hammered and so on and so forth. These are market trends which we cannot really control. So the best way to ensure that your risk is controlled is that you diversify across the entire range of market participants and bring down overall risk which otherwise can be very high, to where the market risk is.
So, the beta of the portfolio becomes almost close to that of the market. You are not exposed to any one single company. As you mentioned, if that one company completely goes off, then what do you do? You do not put all your eggs in the one basket. I think the best way for investors to get introduced to this asset class is through a fund or if they build a portfolio of their own but not less than 20 to 25 stocks at a time.
Do you think the trick for successful and satisfied investors is that you should keep your return expectations realistic? In 2017, we got a return of 20% plus on the index. The small cap index was up 50% and that suddenly raises the bar for an investor. Mutual funds have given great returns in the last three years but it spoils the investor expectations. Do you think somewhere we need to get more realistic when you are investing in stocks also?
Nilesh Shah: Undoubtedly. Stocks are reflections of business and can a business continue to grow delivering 50% return year-on-year? That is like expecting Mohammad Azharuddin to continue to score a century every time he comes to bat. He will get out once in a while but still as long as his average is above a benchmark, above other asset classes, he will be a good cricketer. Tendulkar has got out at zero many a times. Would he have always scored a triple century because he was so talented and committed? Of course not, and yet he is world’s greatest batsman with more than 54 average because sometimes he scored zero, sometimes he scored triple century. Whenever he got opportunity. He kept on making runs. When there was no opportunity to make runs, he just ensured that his wicket was saved, that he remained on the pitch. So, you have to moderate your return expectations and play for the long term.
It takes a tip in a lift to buy a stock. When people want to buy a mobile phone, they will go and google and they will do a research. If a middle-aged man is buying a mobile phone, he will tell his son and daughter to do an extensive research. When you buy an online garment or a book also, you spend half an hour researching all over the place. But I have seen Whatsapp messages, simple messages, a Chinese whisper in a ear, kisne kya liya is good enough for people to take a bet of even five lakh rupees. Why are equity investors so fickle minded, why do they get influenced?
Navneet Munot: A lot of basic theories of economics do not work in the stock market. A normal economic theory is that when price of something goes up, the demand goes down and when price goes down, the demand goes up and people buy more. Yahan pe ulta hai (It is the reverse here). When prices go up, people want to buy more, when prices go down, people do not want to buy because they get fearful. When prices are going up, they get greedy. People think if somebody has made money buying into a stock, they also have to do the same. This is what one needs to control.
An investor can do two things; diversify across asset classes and second be disciplined enough to ensure that your asset allocation does not go substantially away from the goal that you have set for yourself.
As an investor you, what is the ultimate goal, the return expectation and the risk appetite? If the market goes down by 10%- 20%, how much drawdown can you handle? Depending on all that, you allocate to equity. What is the regular income you need? That is how you allocate to fixed income, what is the liquidity need. What are tax implications, the other factors? And putting this altogether once you make a plan, then having the discipline of living through this volatility is the most important part. More than the financial planning, it is the emotional planning which is the most critical aspect for structural long-term success in achieving your financial goals
In real estate, the general mass, aam janta, makes money. That is not the case in equities. Why is that in equity investing, we do not find too many equity investors who are billionaires or even millionaires?
Tushar Pradhan: I would like to emphasise the fact that the penchant for trading for something to be done is very high in equity markets because there is a price available every day. For example, if I flip it around and say that if people were to be more trading oriented they need a price. So, if you buy a house over a period of time, the scarcity and the value in the house will grow. Everybody knows that but as we know, in between also there are cycles in real estate.
For example, if suddenly in three years’ time the price of the house has gone up 200-300% , he does not actually transact for two reasons; one is that he is living in the house and the second is that the liquidity in the market is not that easy to come by.
Now, what does he do with the cash? Typically, he will invest it in a bank account or he will wait for the next time to invest but if you see stock markets never come down to a level which was the same level for many years.
Now, when does he think it is good enough to invest? Never. So, even if he has a short period of success in the equity markets, it will only capture that gain. Many times, actually, it is the reverse because the time that people invest in the equity markets is when everybody is talking about it. Now, if they start to invest at a time when it is very expensive and just an experience after that brings the market down, the price is available, there is something to transact and in fear, a person often gets out of the market, cutting his losses.
The problem again is when he comes out he will go out of the market for a long time because he never gets the courage again to do that because the fear of the loss is very high in his mind. So, for both these reasons, people tend to go in and out of the market and not realise the upside. In real estate, you are not allowed to do that because either you are in the asset or you do not have a price to transact.
Assets Under Management of mutual funds swell 26% to Rs. 23 lakh-crore in FY18
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ICICI Prudential MF tops the table with Rs. 3.05 lakh crore AUM
Mumbai, April 5Thanks to the ‘ Mutual Funds Sahi Hain ’ campaign, the industry seems to have hit the right growth trajectory even as uncertainty looms large on the growth prospects of the economy and corporate earnings.
The overall assets under management (AUM) of the industry has increased 26 per cent in the financial year ended March 31 to Rs. 23 lakh crore, from Rs. 18.31 lakh crore logged in the same period last fiscal.
However, due to the recent fall in the equity market, AUM growth in March was up a mere 4 per cent from Rs. 22.2 lakh crore registered in February.
Last fiscal, ICICI Prudential Mutual Fund had topped the table recording a growth of 26 per cent in AUM at Rs. 3.05 lakh crore ( Rs. 2.43 lakh crore). It was closely followed by HDFC Mutual Fund and Aditya Birla Sun Life Mutual Fund with AUM growth of 27 per cent each at Rs. 3 lakh crore ( Rs. 2.37 lakh crore) and Rs. 2.47 lakh crore ( Rs. 1.95 lakh crore), respectively.
Reliance Mutual Fund and SBI Mutual Fund recorded AUM of Rs. 2.45 lakh crore ( Rs. 2.10 lakh crore) and Rs. 2.17 lakh crore ( Rs. 1.57 lakh crore), respectively.
Sundeep Sikka, Executive Director and Chief Executive Officer, Reliance Nippon Life Asset Management, said the fund house has made a lot of progress in focusing more on retail customers from smaller towns and the past good performance track record of Reliance also helped get new investors.
Axis Mutual Fund has seen a growth of 34 per cent with an AUM of Rs. 77,325 crore ( Rs. 57,700 crore) with launch of four new fund offers mopping up about Rs. 4,900 crore.
Mahindra Mutual Fund’s assets were up 69 per cent at Rs. 3,368 crore ( Rs. 1,995 crore), and that of Edelweiss Mutual Fund’s was up 75 per cent at Rs. 12,100 crore.
Way to decent returns
Jinesh Gopani, Head — Equities, Axis Mutual Fund, said the consistent fund flow into mutual funds shows that investors are now convinced that they cannot rely on bank deposits alone to get decent returns. Ashutosh Bishnoi, Managing Director, Mahindra Mutual Fund, said the fund house has garnered assets from over 300 cities which resulted in about 29-30 per cent of retail assets coming from B-15 cities.
The future target is to raise assets from 500 towns and get about one-two lakh customers by 2020.
Some of the fund houses which registered drop in AUM last fiscal include Taurus Mutual Fund (-73 per cent), DHFL Pramerica MF (-10 per cent), LIC MF (-6 per cent), Escorts Mutual Fund (-5 per cent), Sahara Mutual Fund (-4 per cent) and Indiabulls Mutual Fund (-1 per cent).



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