Page 21 - Banking Finance MAY 2017

MUTUAL FUND

MUTUAL FUND

NEWS
NEWS
NEWS
NEWS
NEWS

Cash in equity funds Mutual Fund reaches the highest net flow in 11 years
As bank deposit rates fell and stock markets rose, mutual funds in 2016-17 re-
climbs to 6%, highest
ceived the highest net inflows in at least 11 years,
since 2012 led by income and liquid schemes.
Cash levels at equity mutual funds Net inflows in the fiscal year ended March rose
climbed to 155.66% from a year before to Rs 3.43 trillion, the
an average highest since at least 2005-06 when the equity
of 6% of as- market was gaining traction, data from the Asso-
sets for the ciation of Mutual Funds in India (AMFI) showed.
March India's benchmark index Sensex rose 16.88% during the financial year, and was
quarter, ac- the third best-performer among its Asian peers. The index has delivered a com-
cording to data from Morningstar In- pounded annual return of 13.48% from 2005-06 to 2016-17.
vestment Adviser India Pvt. Ltd. That
"A rise in systematic investment plans (SIPs) is the most important factor con-
is the biggest proportion since 2012.
tributing to the rise in inflows into mutual funds. Investors are also more aware
Equity funds are reacting to a side- and disciplined in investing from a long-term perspective," said Gopal Agrawal,
effect of the S&P BSE Sensex index's chief investment officer (equities) at Tata Asset Management.
10% gain this year: concerns that
stocks are overpriced. Valuations at Investors can from now on buy mutual funds through
the end of March were at the high- digital wallets
est level since 2010 amid bets that a SEBI is mulling to permit investors to buy mutual funds worth up to Rs 50,000
state election victory will embolden through digital wallets to make it easier for investors
Prime Minister Narendra Modi to to purchase these instruments, especially by young
push ahead with his reform agenda. generation. The move would help in speedy and easy
"Fund managers are being cautious transactions, while reducing failures due to payment
as valuations are looking stretched", gateway issues.
Taher Badshah, chief investment of- Besides, the Securities and Exchange Board of India
ficer of equities at Invesco Asset (SEBI) is expected to put in place regulations for instant withdrawal facility in
Management (India) Pvt. Ltd in liquid mutual fund. Also, asset management companies (AMCs) can tie-up with
Mumbai, said. "The cash buffer will payment banks to provide digital transaction to investors.
give them the ammunition to take
These new facilities will help in increasing the penetration of mutual funds and
advantage of any correction in the
help in channelising household savings into capital markets. It would also pro-
market." vide convenient option to investors to diversify from traditional saving avenue.

BANKING FINANCE | MAY | 2017 | 21

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