India remains highly vulnerable to ‘risk on, risk-off’ FII trades in 2013
What are the global cues to watch out for?
Given the structural long-term challenges that both the US and Europe face, global markets have been volatile. A lot will depend on regulatory and government decisions that the beleaguered countries make and there are no easy answers to solve the problem that developed economies are now facing. Since Indian markets have been reliant on overseas inflows to support domestic markets, we remain highly vulnerable to “risk on, risk-off” trades. In short-term, our 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’.
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