If you are reading the financials magazines, are following some financial blogs and are part of some Facebook groups, you must be thinking that most investors are having equity MF as the investment vehicle of their choice. In fact, it is a fair assumption, that you are putting most of your surplus money in this channel and are sure about your choice being in line with the most popular investment avenue.
Sorry to disappoint, but some data which I happened to see recently is at complete variance with this. The highlights are as follows:-
- Net inflow into equity MF till July has been 10,478 crores. For the corresponding period last year it was 38,095 crores.
- For Debt MF the current year figures are 82,746 crores and last year figures are 29,269 crores.
- If you look at the AUM figures on July 31st then Equity MF is only having a 27% share whereas Debt MF have a 44% share. Liquid funds have about 20%.
While this data can be interpreted in a variety of ways, some of the conclusions are inescapable. These are as follows:-
- Equity MF is obviously not the most popular choice even among the MF universe, not to speak of stocks and Real estate where the net inflows are much higher.
- Last year there was a significant investment in equity MF. However, when some redemption happened this year the same money went into other assets.
- As the number of SIP folios have not really reduced, as per available data, it means the HNI and institutional investment in equity MF is at a reduced level this FY.
The last point is significant as these are people who normally have access to the best research resources and advice. The data is clear – preference of equity MF as a choice of investment has declined significantly from last year to the current one.
This need not really mean, you stop your investments in equity MF as that will be a knee jerk reaction. However, understand that such investments do not have a pole position as far as the overall investment universe is concerned.What is more , they do not have a dominant position even within the MF industry.
The data from AMFI will make very interesting reading over the next few months.