Mumbai: Flush with small investors money, the mutual fund industry has finally become a dominant player in the equity market pumping in Rs 1.16 lakh crore in 2017 till date, which is more than double the amount invested by foreign portfolio investors. With other asset classes like gold and realty expected to underperform, experts feel that the industry would continue to witness steady inflow of funds from retail investors and would be a prime driver of equities. In 2017 till date, overseas investors have invested just Rs 49,835 crore.
“The increase in retail participation in mutual funds was on account of two factors. First, the prospects of return from other asset classes like gold and real estate were not as attractive as equities. Secondly, the demonetisation of high value currency note during the end of 2016 quickened the pace of capital shift from physical assets to financial assets and the mutual fund industry was the major beneficiary of this reallocation of household savings,” said Jaideep Bhattacharya, founder of Top3choice.com.
According to experts, the steady flow of investment from mutual fund industry has brought certain degree of stability in the equity market as it has offset the impact of outflow of funds from overseas investors. According to AMFI, the assets under management of the MF industry stood at Rs 22.79 lakh crore in November 2017. During the month, equity funds witnessed a net inflow of Rs 20,308 crore adding 12.24 lakh new investor folios in the equity category. The total folio count at the end of November 2017 stood at 6.49 crore.
“We took almost two decades to reach 6.49 crore folio count. This number is expected to double in another 3-5 years as the number of retail investors in the equity markets is still very low when compared to other markets. With growing awareness and prospects of higher returns from equities remaining intact, the number of individuals investing in equities are also likely to rise in coming months,” added Mr Bhattacharya....