Mumbai: While the equity markets are making record highs, domestic fund managers faced with heavy redemption pressures from small investors are not able to take full advantage of the current upside even though the prospects of markets scaling new peaks are looking quite bright.
Market experts pointed out that the fund managers are forced to liquidate their holdings to meet the growing redemption pressure from unit holders.“Most of the fund managers are regretting the fact that they are not able to take full advantage of the buoyancy in the market. In the last couple of years, the goings have been really tough for the equity markets and only a few had made money.
Now finally when there is an opportunity to really make money on growing optimism about the formation of a stable and decisive government, they are forced to sell in the market,” pointed out Surajit Misra, national head, distribution, Bajaj Capital. According to the data available with the Securities and Exchange Board of India (Sebi), domestic mutual funds have remained net sellers throughout this year.
In 2014 till date, they have sold equities worth Rs 9,914 crore. However, Sundeep Sikka, CEO at Reliance Capital Asset Management said that the recent rally has also started attracting investments from new investors.
“It’s true that there is redemption in the industry. But it is largely from those unit holders who had stayed invested for a long time. We are now seeing fresh investment from small as well as high net worth investors.
While savvy and high net worth investors are putting their money in sector specific schemes like banking and infrastructure, retail investors are preferring diversified equity schemes,” he said, and added that small investors take time to come to the market and hopefully this trend should start picking up momentum in the coming months.
