Historically, election years have been rewarding for the equity MF investors, so do not wait on the sidelines for the elections to get over, for you might miss the bus if you are not invested
The darkest hour is just before dawn. The inflows into the equity MFs have touched their lowest in the last two years. The net inflows into equity mutual fund schemes, including ELSS, came in at Rs 5122 crore for the month of February 2019, which is down by 17% on a monthly basis and is at a two-year low. Last time, we saw such low inflows in March 2017. After that, there was a spurt in inflows, which touched Rs 20362 crore in the month of August 2018.
This leads us to a question: Have we touched the low in terms of inflows and will we see a reversal in the trend and an increase in net inflows into equity mutual funds? Have we left the worst in terms of inflows behind us? To answer this question, we need to understand the factors that have led to such a decline in inflows and whether those factors are going to turn around now.
The reason for such low inflows is consistent underperformance of the MF schemes in terms of returns as compared to even bank fixed deposits in the last one year. Except for the large-cap category, almost all other categories in equity dedicated funds have given lower returns than bank fixed deposits (FDs), assuming an average FD rate of 7 percent.
Such underperformance was reported despite the large surge in the performance of MF schemes we saw in the last one month. The picture of returns was much grimmer one month back (see the graph). The table below shows that, on average, the domestic equity funds have generated returns in the range of 7-11 percent.
So what is the reason for such recent outperformance of the schemes and whether it will attract inflows from the retail investors into mutual fund schemes? Also, how sustainable is the outperformance? Are we witnessing a pre-poll rally and the gains will fizzle out after the elections? (Check the relation between inflows and change in Sensex returns)
Equity rally: Will it sustain or fizzle out?
Esta historia es de la edición April 04, 2019 de Dalal Street Investment Journal.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.
Ya eres suscriptor ? Conectar
Esta historia es de la edición April 04, 2019 de Dalal Street Investment Journal.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.
Ya eres suscriptor? Conectar
How To Invest In An Ageing Bull Market
Bull rallies (periods when stock prices rise) and bear declines (periods when stock prices fall) are natural parts of stock market cycles, but they don't follow a fixed timeline.
Should You Entrust All Your Money To A Single AMC?
If you are a market participant, you have probably heard the quote 'don't put all your eggs in one basket', which suggests diversification. Investors often focus on diversifying across categories like large-cap, mid-cap and small-cap, but they may unintentionally overlook diversification across different AMCs. The question arises: is AMC-wise diversification really necessary? Rakesh Deshmukh takes a closer look at this scenario
Wild Swings Engulf Global Equities
U.S. stock markets experienced significant volatility. An early-week rally pushed the markets to new highs, but this momentum faded, primarily due to weaknesses in the tech sector. The major indices had a mixed finish with, S&P 500 and Nasdaq closed lower, while the Dow recorded a notable gain.
U.S. Elections and China's Economy Hamper Commodities
Commodity markets experienced selling pressure in the last fortnight, driven by uncertainties surrounding the upcoming U.S. presidential elections, concerns about the Chinese economy, and increased agricultural production in Brazil.
Wealth Building For Retirement Through Mutual Funds
Retirement is one of the most crucial and lifechanging phases. It marks a period where maintaining your lifestyle becomes paramount even though your regular income stops.
Mastering Investment with Information Ratio
Information Ratio helps in navigating the complexities of the investment landscape by assessing an active fund manager's performance. And though it has its limitations, it remains an essential part of the finance industry. The article explains what Information Ratio is and how investors can use it as another tool
Plan To Be Financially Independent
Each of us aspires to be financially independent as it ensures having enough resources to be self-sufficient and control our finances.
❝Technology is the new game-changer"
With a new breed of young investors entering the financial markets, it is the use of technology that is increasingly playing a major role in how investments are done and tracked. Anand Radhakrishnan, Managing Director, Sundaram Mutual Fund, shares his opinion about how this factor is turning into a significant tool and how it will shape the strategies of his company
What If Donald Trumps?
The potential election of Donald Trump as president in the U.S. carries significant implications for the Indian equity market. It could lead to changes in the global trade dynamics, in particular affecting the Indian IT sector while also raising inflation levels and leading to yet another revision in the visa programme for Indians who want to work in the US. The article takes a closer look at what may lie in store
Sectoral Gains Make A Mark
Benchmark indices continued their uptrend, reaching new record highs, although the pace has slowed as the broader markets faced selling pressures
