How do you read this data; equity inflow at a 6-month low but SIP numbers at an all-time high once again. Now, what does this indicate? Lot of profit booking at market high?
Yes, you said it because whenever the markets are the way they are right now and there has been a very sharp upturn in the last one month at least, we do expect some of the investors to take some money off the table. But what is heartening to see is that while, the lump sum investment is seeing that kind of a behaviour, the SIP investor is absolutely staying put in the market. We have to observe that the same investor is behaving very differently because in my portfolio; I would have a SIP, I would have some lump sum. While I would be redeeming from the lump sum side, my SIP continues to grow. And that is just re-emphasising the long-termness of equity in people’s minds. And finally, we are seeing the right behaviour of investors towards this asset class at a time when the country is poised to become a very strong economy in the next five-seven years or seven-10 years. People who hold equity will benefit from this journey and that is what is playing out.
So the number is Rs 14749 crore in May as compared to Rs 13,728 crore in April. What pockets are we looking at? Increasing interest in small cap and mid cap, 27th consecutive month where we are seeing a lot of investment coming in over here.
The SIP figures are showing a little bit of decline this month. I would not read too much in a one-month data. It could be due to some other factors of maybe the SIP registrations or the stoppages, we have to read through the data. If this follows up in the next two-three months then we can see a trend. But in the first month, I would not read too much. But yes, what you are saying is correct. There is a lot of discussion on the large cap side on its capability of alpha generation. But we are hence seeing a shift towards midcap and small caps among investors. And hence, the progression seems to be growing towards the lower market cap in portfolios. And now two things on this; one observation is the focus continues to be more towards the return generation, probably than on this mitigation.
Because if people stop buying large caps and start buying small caps, I just hope and pray that they are aware of the increase of risks in their portfolios. If they are, there is no issue. But if it is just pure return generation or return chasing, then one has to be a little cognisant of the increase in the risks in their portfolios that is mounting through this process.
Very well, diversification is needed in their portfolio across market caps. But then what is the trend at your AMC? What is the category that investors are looking at?
I think the trend at our fund is the same. We do not have a small cap fund, so we cannot comment on that. But we have seen some interest in our flexi cap. We are seeing some interest in our balance advantage which in the industry is going the other way. The SIP book remains consistent. So yes, the large cap has got some redemption.
So it is very much in line with what is happening in the industry. We are not deviating from the trend. The only place where we probably deviated is the balance advantage. Our ETFs have got flows like the industry and incidentally in the ETFs also we have seen some profit booking last month. So across board, people are taking off some money off the table.
And the good part is they are taking it off at market peaks. I will be a little upset if they start taking off at the lows in the market but no harm in taking some money off in the market peak as long as they buy when the markets go down.
And that has been the change in trend in investing in Indian retail investors, at least post COVID. They have been buying low and if some of them are selling high, nothing wrong with it.
Talking about new investors, what is the trend in tier 2 and tier 3 towns? Anything specific or new that you have observed?
See, I think the trend on SIPs is only getting stronger in those places. There also the trend is skewed towards small caps and I just hope it is not the new investors who are coming directly to small caps that is very difficult to sort of gauge.
But the trend of the SIP registrations continue to get stronger month on month from these cities and that is just the beginning of the penetration of mutual funds across the country.
Today, if you see the number of folios being added year on year, post COVID is completely different to what used to happen before COVID. So one can safely start concluding that the investment in financial assets is just on the threshold and in the next four-five years, we will see more shift towards financial assets than the erstwhile fixed assets that was the trend of Indian investors.
