The Hindu Business Line : Retail participation slows down for mutual funds

Mumbai April 3 Fresh investment from retail investors in mutual funds has slowed down given the increased volatility in equity markets. Most fund houses witnessed a decline in fresh inflows in March; and most investments came through the systematic investment plans (SIPs).

The volatility and uncertainty in markets have led to the slowdown in the pace of fresh investments by retail investors, said Mr T.P. Raman, Managing Director of Sundaram BNP Paribas AMC. "The drop could be around 25-30 per cent," he added.

There has been a slowdown in investments in March, but there is no panic or redemption pressures as markets are rebounding, said Mr Sandesh Kirkire, CEO of Kotak Mahindra Asset Management Company.

Through SIPs

Fund managers said fresh inflows were increasingly through SIPs or new fund offers.

"Money keeps coming in the form of SIPs, though the degree of fresh investments is varied. The resilience of retail investors to enter equity markets is continuing unlike a few years back," said Mr A. Balasubramanian, Chief Investment Officer of Birla Sun Life Mutual Fund.

Mr Naval Bir Kumar, Managing Director of Standard Chartered Mutual Fund, said it was a constant trend for investors to come in during rising markets, as they were more comfortable.

"Investors are now learning that equity is a long-term game," said Mr Raman.

Since fund managers see no redemptions from investors, cash levels in their portfolio have been maintained between 5-10 per cent or have increased marginally.

Mutual funds have been net sellers in equity markets for the three months (January to March) of the current year to Rs 3,501.02 crore, as per data on SEBI web site.

"Net outflows have been on account of the prevailing market conditions and also a lot of fund houses have declared annual dividends in March," said Mr Prateek Agrawal, Vice-President of Head-Equities, ABN Amro Asset Management.

However, the total outflow of money is a small part of the total assets under management of mutual funds, said Mr Kirkire.

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