MFs get enquiries from investors after recent fall

The tumbling markets seemed to have sparked a bit of investor interest in mutual funds. According to fund managers, the mutual fund industry has seen some amount of inflows into equities.

“There are a lot of inquiries that are coming in now for investments. In the next three to four months, we expect to see more inflows as valuations get reasonably attractive,” said Mr Ramanathan K., Chief Investment Officer, ING Investment Management (India).

Valuations attractive

Analysts say that valuations at this point are looking attractive, which is what is bringing in more investors. “The last six months have been very difficult for the markets because of which we aren't seeing excessive leverage, buying or selling.

“Investors who are in the market now, are previous long-term investors, who are for now staying put,” said Mr Ravi Gopalakrishnan, Executive Director, Chief Investment Officer — Equity, Pramerica Asset Managers.

Fund managers and analysts feel that this time around the investors are much more prepared and much more aware. In January 2008 when the markets tanked, the mutual fund industry saw heavy redemptions.

From Rs 1.72 lakh crore in January 2008, the assets under management of the equity schemes came down by almost 45 per cent to Rs 93,828 crore in January 2009. As of July, the equity schemes' AUM stood at Rs 1.66 lakh crore.

“The ban of the entry load has resulted in investors putting their money into good schemes. The trust factor is high in such cases because they believe that since these schemes managed to survive through 2008 and 2009, they will perform well this time around as well.

Repent SIP stoppage

“In fact, many investors are now repenting stopping their SIP investments in mid-2008 and 2009,” said Mr Hiren Dhakan — Associate Fund Manager, Bonanza Portfolio.

He added that while inflows are not very significant as of now, the number of SIP investments had been increasing gradually.

Many fund analysts also say that investors are not simply chasing returns anymore. The portfolio of the scheme, along with its past performance, is a priority for investors over the returns generated by it. “It doesn't matter if the scheme doesn't top the chart. But what is important that it beats the benchmark index,” said Mr Dhakan.

For the equity fund managers, the banking sector is the most preferred one, followed by the auto, pharmaceuticals and consumer durables sectors. However, they are wary of the IT sector due to its exposure to the west.

“With so much leverage out there, the current decline in global markets just shows how vulnerable the west is. So, the IT sector with its exposure to those markets is cause for concern as of now,” said Mr Gopalakrishnan.

Infrastructure, while being a contra bet for now, is also on the fund managers' list as they expect the sector to pick up in the next two-three years.

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