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Mr C.J. George

C.J. Punnathara

Kochi, Dec. 31 While accretions to the mutual fund portfolio continue to be muted, redemptions have been few and far in between in the recent past, sources in the stock market said.

“Unlike the past market meltdowns, there has been no panic selling among mutual fund investors, who have shown the forbearance to wait and watch rather than redeem their holdings even at the current exceptionally low levels,” Mr C. J. George, Managing Director of Geojit Financial Services Ltd, said.

However, the sale of MF products continues to be at an all-time-low. “While we used to sell close to Rs 50 lakh worth of MF products one year back, the sales have plummeted to around Rs 1 lakh last month,” the branch manager at a stockbroking firm (who did not want to be identified) said.

The ticket size of MF sales per individual has also fallen sharply from the peaks of early 2008, bringing down the total value of transactions in the segment.

The major accretion to the portfolio now comes from systematic investment plans which has been growing steadily. However, the ticket size of these sales are often in the range of Rs 2,000-3,000, lower by more than 10 times the ticket size of MF investments a year ago. The few redemptions in MFs come from investors who are in dire need of liquidity rather than people who want to exit the market, sources said.

Though there has been a small revival of interest in the stock markets in the recent past, it has been confined more to equity rather than in MF products, Mr George said. This is mainly because there are a large number of blue-chip stocks available at all-time low valuations. And only the most prudent and rational investor willing to take the risk is coming into the market at this time.

The majority are still sitting on the sidelines and waiting for a strong direction to emerge, before plunging back into the market. And the rational investor, who is willing to take the risk would always plumb for equities rather than MFs, the sources added.

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