Mumbai, Nov 1: The realisation that only debt funds can give somewhat assured returns, retail investors are pouring all their hard earned savings in the debt related mutual funds. Net mobilisation by the debt related mutual funds has doubled during the month of October at Rs 473 crore. The aggregate figure for the first ten months in this current year stood at Rs 3,049 crore. In comparison, the equity market has witnessed a net outflow of Rs 325 crore during the same period."There has been a shift in the sentiments as well as preferences of retail investors towards riskless money market mutual funds. In the scenario of rising interest rates, retail investors are more averse towards long dated instruments as it will reduce reduce the net assets value (NAVs) of the schemes. They prefer to shift to short term debt funds," said a fund manager with an investment firm. Global volatility has also affected the performance of the scrips in domestic bourses, specially in the equity segments. Foreign Institutional Investments (FIIs) which began on a positive note for the first five months, figuring at Rs 7,319 crore, went negative in June and July. The low level of activity can be attributed to the reallocation of country portfolios by the larger FIIs operating in the country. "Most balanced funds are reshuffling their portfolios by reducing their exposure to equities by moving towards debt instruments," fund managers opined. "This can be one of the reason why we are witnessing sales inequity market and buying in debt market," the added.
According to SN Rajan chief investment officer, Kotak Mahindar Mutual Fund: "Retail investors are not keen to take risk in a depressed equity market and are reducing their investments, waiting for the market to bottom out."
"Investment are at their low when the market is down and offload increases when the market goes up. Investors are avoiding their risk by moving largely towards short term money market funds which are the safest instrument investors can avail off," said Gul Teckchandani, chief investment officer with the SUN F&C Asset Management.
The debt market currently is well poised and is expected to do well. The liquidity is expected to remain comfortable with inflows from India Millennium Deposit (IMD) of around $4 to $5 billion. The bond prices are also expected to rise further with the positive outlook on the interest front. The call rate is expected to remain in the single digit level tracking the falling repo rate. The dollar inflows from IMD is likely to take care of any temporary mismatch in the rupee-dollar demand.
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