markets will continue to be governed by volatile FII inflows
SIP numbers for mutual fund industry have not picked up this year. What is your assessment?
The industry’s AUM corpus has consistently eroded over the last four years and the number of SIPs have been stagnating or declining. But there is no reason why SIP numbers cannot pick up. If the industry invests in transparency, takes the right initiatives towards investor education and markets mutual funds as a sound investment option, things can change.
Fortunately, we have not experienced such outflows in our schemes and, as of November 30 this year, about 40% of our total investor folios were under SIP. It has been our understanding that SIP investments work well with retail investors as they do away with the hassles and paperwork of investing through other modes of investments and are popular for reducing risk because of ‘rupee cost averaging’.
What would be your advice to investors?
We see India growing 7% in long term. Our advice to investors would be to continue participating in this growing market either through equities or debt, depending upon their stage in the financial cycle and risk appetite. Don’t look at making short-term gains in the near future; rather look at your financial goals and invest prudently so that you can achieve those goals as quickly as possible.Retail investors should be disciplined and invest through SIPs rather than trying to time the market.
At a time when all mutual fund houses have been struggling, what are the challenges specific to small fund houses?
The Indian MF industry needs to break the myths of size, reach and sponsor’s strength and establish the fact that mutual fund is a pass-through medium of investment. The war chests of smaller fund houses are not as big as those of the top 5 fund houses. However, there is no reason why small fund houses can't grow and do well in the future if money is channelised in the right manner to reach out to and educate investors. We need to tell the average investor that they can achieve their financial goals