Now, almost 6% increase has been seen in assets under management in 2022, while we saw a marginal decline from the month of Feb. Why is that?
Essentially, it is a factor of market movements. Market was very volatile during the month of March. So naturally, the market has an impact on the NAV and consequently on the AUM.
So, it has been a good month for equity mutual funds. They have been the highest in a year. On the other hand, we have seen debt fund outflows also increasing. They are at a six-month high. Why do you see that disparity and is the debt fund outflow because of the tax law changes?
Essentially, the equity inflows have been high for the simple reason that Rs 20,000 crore has come in. Net flows have come into the equity mutual funds. And it is because the investors are taking a view that the Indian markets will do well in this financial year, so they have started investing into the equity mutual funds.
In the debt funds, essentially, there is an interest rate tightening cycle which had happened and March being quarter-end and year-end month, the corporate treasuries would have withdrawn money from the liquid fund and overnight fund to pay off their taxes and the banks would have taken money out of the liquid fund and overnight funds to manage their capital adequacy. Because of this, you saw a net outflow of over 50,000 crore in the debt funds.
Meanwhile, we have seen SIPs breaking records and that is the record set in January this year. What do you put this down to? How do you see investor behavior in the first two quarters of FY 23-24?
We see a very positive trend in SIP flows. Last year, if you see, at least around Rs 14,000 crore has been there in the last four months. And now, if we look at this month onwards, we will still see the Rs 14,000 crores coming up. By the year-end, we believe that at least the SIP flows should be at least around Rs 15,000 crore.
And are small and midcap funds getting hotter this summer, in your view?
The small and midcap funds are also doing well. For the simple reason, the small and midcaps valuations have corrected substantially. So, people are now thinking that there is scope for small and midcap funds to perform better, that is why the money is coming into small and midcap funds.
Some interesting data that has come out this time around and I think we should focus on that a bit as well. 40 lakh first-time investors, 11 lakh new women investors; the total pie, however, is below 4 crore unique investors. Do you see a rapid change in the way the average Indian is investing and engaging with the stock market?
Definitely, the Indian economy is poised to grow and do better in this financial year and the coming financial years. So, essentially, Indian markets will do well. If that is the premise under which we are working, the equity market will do well because the corporate earnings are expected to be much better which will ensure that the valuations will also go up and the equity markets will do substantially better. If that is the case, we will see the equity mutual funds grow in the years to come.
