In just two weeks, equity markets have witnessed a steep downfall of 25%. The BSE Sensex has reached 28,000 points from its peak of 42,000 due to coronavirus outbreak. In fact, Rs.3 lakh crore has been wiped out from the MF industry so far.
We spoke to MF officials to understand the impact of the coronavirus on the mutual fund business. Let us see what they have to say:
DP Singh, ED and CMO, SBI MF
So far, the coronavirus has wiped out Rs.3 lakh crore from the MF industry. Clearly, the growth numbers, which we have achieved in the first 11 months has gone in vain. In my view, many companies would see negative growth in the fiscal year ending FY 2019-20. But the good part is that the current market offers a good entry point for lump sum investors. They can make handsome money from equity funds if they invest patiently in equity funds.
Kailash Kulkarni, CEO, L&T MF
We have seen many crisis due to viruses, scams and financial meltdown in the past. These events last for two to six months. Going by this trend, I don’t think coronavirus will last longer.
However, the current correction in the markets offers a good entry point to investors.
On the growth projection, it is too early to evaluate the impact of the coronavirus on MF business. It is difficult to extrapolate something based on 10-15 day event. I think if things recover from here, we may see markets breaking all the records.
Radhika Gupta, CEO, Edelweiss MF
This is the first big market crisis that many investors and distributors are facing post 2008. In fact, I have been getting queries from distributors on how to manage investors mindset during these challenging times. For me, both distributors and investors should be mindful of product selection. We have been telling our partners to focus on responsible products with sound investment philosophy.
We have not made any changes in our growth projections. Even if we see a downturn for the first six month of the upcoming financial year, we are well equipped to recover quickly. In my view, if you manage the crisis well, people reward you post crisis.
Currently, our concern is to protect our distributors, investors and employees from the coronavirus threat. Simply put, we will ensure safety of capital and our people.
Swarup Mohanty, CEO, Mirae Asset MF
So far, distributors and investors have behaved rationally. Many distributors have been recommending their clients to put more money in equity funds as the recent correction offers a good entry point for lump sum investors who were in wait and watch mood. However, if the threat continues for a quarter, things could be very different. So far, we have seen such situation in movies but now we are living it. This is completely unchartered territory for most of us.
Interestingly, there has been a behavioral shift. Today if I get 10 calls, eight calls are about opportunities in the markets while two are about fear and panic. A few years ago it was the other way around.
For me, this event is like demonization; we have told our shareholders that there will be a huge impact of the coronavirus but it is difficult to predict the exact outcome.
Vishal Kapoor, CEO, IDFC MF
It is too early to assess the full impact of coronavirus on the growth of the MF Industry. We don’t anticipate any significant long term impact to our industry due to Covid-19, considering that the structure and many benefits of MFs remain intact, and the growing maturity of investors. Today, many investors look at steep corrections as a buying opportunity. In my view, the coronavirus is certainly driving market uncertainty and aggravating economic stress in the near term, but we anticipate that markets will recover once this phase passes.
