Retail participation in the debt market, which mostly sees institutional participation, has been increasing substantially since 2009. AMFI data shows that retail AUM of debt funds rose to Rs79,000 crore, as on March 2017, from Rs9,000 crore in March 2009.
Resonating the increase of retail participation in debt funds, G. Pradeepkumar, CEO, Union Mutual Fund and Vice-chairman, AMFI, says, “Appetite for dynamic bond funds is picking up among retail investors.”
R. Sivakumar, Head of Fixed Income, Axis Mutual Fund, says that retail investors are interested in short-term funds. “Retail investors are investing in credit funds and short-term debt funds as these funds are less sensitive to the interest rate changes,” he adds.
Overall, assets of short-term debt funds grew 3.85 times in the past three years and 81% in the latest fiscal to reach a new high of Rs2.72 lakh crore as on March 2017, shows AMFI data.
Experts also attributed renewed interest of retail investors in debt funds to adequate liquidity in the market due to increasing participation of fund houses.
“The Indian bond market has been greatly benefitted by the participation of mutual funds. It has provided a much-needed liquidity in the bond market. As a result, it has reduced the cost of financing of the companies and has assisted in the transmission of interest rate cuts,” A. Balasubramanian, AMFI Chairman and CEO of Birla SunLife Mutual Fund, said at the first AMFI Summit in Mumbai on Thursday.
“Mutual funds are one of the major buyers of government securities, corporate bonds, and money market instruments providing adequate liquidity in the debt market,” said the CEO, Union Mutual and Vice-chairman AMFI.
