No panic redemptions by local MF investors this time despite mayhem

This shows the intensity of pessimism is not that high as is generally expected in present market conditions.

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Pure equity, ELSS and dividend yield categories together constitute around 40 per cent of the total equity assets under management (AUM).
ET Intelligence Group: Indian savers appear to have finally learnt the art of sticking to their long-term wealth-building goals.

In earlier periods of market downturn, mutual fund investments would get the chop, with redemptions far outweighing inflows on an average. Not any longer.

  • -4.78%Annualized Return for 3 year
  • >3 years Suggested Investment Horizon
  • N.ATime taken to double money
  • 6.91%Annualized Return for 1 year
  • <1 yearSuggested Investment Horizon
  • 6.10 YearsTime taken to double money
Industry data showed that the gross sales to redemption ratio reflects no panic from local savers. Gross buy-to-sell ratio — total inflows divided by outflows — of equity mutual funds stood at 1.75 at the end of April, compared with a medium ratio of 1.60 in the past 12 months.


This shows the intensity of pessimism is not that high as is generally expected in present market conditions.

In the past two months, equity schemes have received gross inflows of Rs 44,625 crore. In the same period, there have been gross outflows of Rs 26,889 crore. Barring the dividend yield fund category, all categories have gross buy-to-sell ratio of more than 1.23.
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The equity-linked savings schemes (ELSS) have the highest gross buy-tosell ratio at 3.76, followed by focused funds at 2.37 and large cap at 2.16. A rising ratio of gross buys to sales shows that the pace of incremental money entering schemes is higher than people who are redeeming.
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Pure equity, ELSS and dividend yield categories together constitute around 40 per cent of the total equity assets under management (AUM). The total equity AUM stood at Rs 6.60 lakh crore at the end of April 2020, a gain of Rs 81,563 crore from the previous month.

Even the new folio addition for equity funds in April has been higher than the historical trend. There have been 6.01 lakh new folio additions in April, compared with an average of 4.29 lakh in the past 12 months. The money invested from the systematic investment plan (SIP) route continues to remain quite stable.

The ratio of new additions to closure of SIP accounts stood at 1.41 and 1.36 in March and April, respectively. It shows that there has been some moderation in the addition-to-closure ratio in the past two months, but the pace is not alarming. This means investors have not turned extremely bearish regarding their investments through SIPs. The SIP book AUM rose to Rs 2.75 lakh crore in April compared with Rs 2.39 lakh crore in March, a gain of 15 per cent.

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