Retail investors accessing equities through mutual funds
(MFs) continued to book profits amid steep volatility witnessed in February.
The redemption amount hit a 16-month high, while net outflows, were the highest
since October 2010.
According to the statistics released by industry body
Association of Mutual Funds in India (Amfi), overall redemption from pure
equity schemes stood close to Rs 6,300 crore in February. With consistent
subdued fresh sales of equity funds, the net outflow increased to Rs 2,700
crore against Rs 456 crore in the previous month.
“This is in line with expectations,” says Akshay Gupta,
chief executive officer of Peerless Mutual Fund. “Especially when equities are
not stoking confidence among investors, who are preferring availability of
alternative investment avenues including fixed deposit and tax-free bonds.”
After a steep rally in January, sharp volatility hit the
markets in February. During that month, benchmark stock indices ran up eight
per cent, only to see a correction of over four per cent in a matter of a few
sessions. “Investors are using these intermittent rallies to exit,” explains
Gupta.
The chief investment officer (CIO) of a foreign fund house
agrees, noting that extremely high volatility is taking toll on investors’
sentiments. “Indian retail investors prefer to stay away when markets correct.
When the rally comes, they wait for corrections,” he notes.
“This makes me wonder: when would retail investors come in?”
Industry officials to whom Business Standard spoke say there
was no reason for the market to rally so steeply in January. “Had this rally
happened during a course of three to four months, lost investor confidence
could have stood restored,” explains the CIO. “But, sharp movements tend to keep
investors away which is hitting MF equity schemes.”
With such a sharp outflow in February, the overall inflows
in the equity segment has barely managed to remain in the positive territory so
far in the current financial year at less than Rs 500 crore. During the same
period (April-February) last year, the industry had witnessed a net outflow of
a whopping over Rs 13,000 crore — the highest for the fund industry.
However, concerns continue to remain among fund managers
about the current month. They say, there is no enthusiasm among investors.
According to them, investors have started questioning industry’s objective of
long-term investment as they have not made gains over the last three to four
years.
“Their point is valid,” adds an equity head of a mid-sized
fund house. “That is the reason why the industry’s most sold concept of SIP
(systematic investment plan) too has been hit hard over the last six to eight
months. Cancellations and terminations are happening on a consistent basis.”
Source: http://www.business-standard.com/india/news/redemptions-in-equity-mfs-hit-16-month-high/467497/
Posts
