Investor interest in mutual funds has waned since the Sensex’s peak of about 28,300 points in early August 2015. From over Rs 9,000 crore as at the end of August last year, net inflows into equity funds have steadily dwindled to just around Rs 2,500 crore by end February 2016 ( latest available data).
But if one looks at the glass as half full, the good news is that investors have kept faith in equity mutual funds during these tough times. 38 out of the 172 diversified equity funds, or roughly one-fifth of them have managed to increase their asset sizes in the August 2015-February 2016 period, despite erosion in their NAVs ( Net Asset Value). NAV can decline due to the market fall and in many cases, dividend declarations as well. What’s more, the choice of funds is appreciable too, with investors putting their money predominantly into funds which are among the best in class and which have a reliable track record.
Says Taher Badshah, Fund Manager and Head –Equity MFs at Motilal Oswal Asset Management, “Even amidst the volatility and uncertainty, it is notable that we are not seeing net outflows from equity funds. The approach of domestic investors to mutual funds has been far more rational and mature this time around. People have been accepting of the India growth story given the reforms that are happening and have also reposed faith in the political dispensation. Therefore investors are willing to ride out the volatility and SIP investments are continuing to be active now.”
