Retail investors have reaffirmed their faith in equities in December as monthly equity flows more than doubled sequentially reaffirming the faith in the asset class to generate additional income.
The rising equity flows will not just support Indian markets but will also create wealth for investors who invest for long term.
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Equity-oriented mutual funds witnessed a robust net inflow of Rs 25,076.71 crores, which was sharply higher than the net inflow of Rs 11,615 crore in November.
“Low Yield in debt funds is the prime motivation for the investor to re-allocate the funds to the equity funds, as targeting even 6 percent seems to be a dare in the debt space and after accounting for tax and inflation, real returns might not convince the investors to stay invested even for the sake of risk management of the overall portfolio,” Akshat Garg, Manager, Research at Investica, said.
“December data also shows the rise of popularity of “Passive Investing” in India; as many as 10 schemes were launched this month including ETFs,” he said.
“Passive Investments” is an easy bet for new investors which does not require too much homework from the Investors, hence AMCs are aggressively marketing the same in their campaigns
Flows into equity-oriented schemes got support from strong Systematic Investment Plan (SIP) numbers and robust inflow into multi-cap fund category, data showed.
This was also the 10th consecutive monthly net inflow, data with Association of Mutual Funds in India (Amfi) showed on Monday.
In comparison, equity mutual funds logged net inflow to the tune of Rs 11,615 crore in November, Rs 5,215 crore in October, Rs 8,677 crore in September and Rs 8,666 crore in August.
The monthly SIP (systematic investment plan) contribution rose to Rs 11,305 crore last month from Rs 11,005 crore in November. The number of SIP accounts grew to 4.91 crore from 4.78 crore.
The equity-oriented categories ended the year with a robust net inflow of Rs 96,669.97 crores, significantly higher than the net inflow of Rs 9,102 crores in 2020, Morningstar India report said.
“Most of the investors found the correction in the market as good entry point which is evident from a higher quantum of fund mobilised, thus highlighting the positive sentiments among investors and their willingness to invest in market dips,” Himanshu Srivastava, Associate Director – Manager Research, Morningstar India, said.
“Despite the concerns over the Omicron variant of the coronavirus pandemic and the surge in the number of covid cases in the country which has triggered a third wave of the pandemic, the growth outlook over the long-term remains strong,” he said.
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