KOCHI: With traditional investment avenues such as real estate yet to recover fully from the impact of demonetisation and bank deposits not giving enough returns, more and more people are turning to mutual funds (MF) as an investment option. In the past one year, there has been a steady increase in the number of people turning to MF, according to P R Dilip, managing director of Mumbai- based Impetus Wealth Management, a Sebi-registered portfolio management firm.
“It is a fact that stringent regulations and demonetisation have adversely affected the real estate sector in the country. A total of Rs 3.44 lakh crore was pumped into mutual funds in just one year after demonetisation - between November 2016 and October 2017,” Dilip said.
Total assets under management of domestic mutual funds, which stood at Rs 3.26 lakh crore in 2007, now stand at Rs 21 Lakh crore. “Dwindling return from the fixed return instruments such as bank deposits and PPF will make every citizen think about alternative options for achieving a meaningful return on their investments. The inflows into the mutual fund schemes have gone up substantially in recent months crossing monthly inflows of Rs 5,000 crore,” he added.
Dilip, though, pointed out that it’s wrong to perceive capital market as a place to get supernatural profits or returns on a continuous basis.
“The bull rally we are witnessing now has come after a dull period. However, prudent investments would certainly help investors make returns from Indian capital market as country’s economy is on a long growth-trajectory,” he said.
There are many investors who still follow traditional investment options. This, according to Dilip, may be due to lack of awareness. “Of the Rs 21 lakh crore investment in mutual fund across the country, the share of Kerala is only Rs 19,300 crore. People should understand the changed economic scenario in the country and know about investment options,” said Dileep, who has been into portfolio management for the past 23 years. “Yet, considering high literacy level and banking penetration in Kerala, the scope for mutual fund penetration is very high,” he pointed out.
The financial / banking sector has witnessed a lot of regulatory changes over the past few years. These changes are in line with the major steps taken by the developed nations in the wake of the 2008 financial crisis. Actual benefits of structural reforms in industries will be visible within six months to one year. Stocks and other investment instruments would reflect these positive impacts appropriately in the days to come. As the inflation comes under control and other macro parameters become conducive, the cost of funding in the country is likely to reduce in the near future. This would have an impact on small savings and other investment instruments with fixed returns, he said.