Here’s why S Naren of ICICI MF is not worried about equity mutual fund inflows falling to 20-month low

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Published: April 11, 2018 4:55:17 PM

After the equity mutual fund inflows fell to a 20-month low in March 2018, S Naren of ICICI mutual fund says that much importance need not be given to the data as it was the last month for the financial year, causing redemption pressures as investors sought to manage their tax outflows and pay advance tax.

mutual funds, mutual fund investment, mutual funds India, mutual funds sahi hai, SIP, LTCG tax, LTCG on mutual fund, mutual funds plan 2018The equity mutual fund inflows fell nearly 60% to Rs 6,657 crore in March as compared to Rs 16,628 crore in February.

After the equity mutual fund inflows fell to a 20-month low in March 2018 to plunging 59% to Rs 6,657 crore, S Naren of ICICI mutual fund says that much importance need not be given to the data as it was the last month for the financial year, causing redemption pressures, even as investors sought to manage their tax outflows. In an interview CNBC-TV18, S Naren of ICICI Prudential AMC says that the flows are comfortable, and the drop must be seen in the overall context coming on the back of a high base.

Notably, the equity mutual fund inflows fell nearly 60% to Rs 6,657 crore as compared to Rs 16,628 crore in February. Overall in the year, March registered highest-ever redemption in equity mutual fund schemes at Rs 36,987 crore, data from AMFI showed.

According to S Naren, March being the last month in the fiscal year, books of accounts were being closed, people were investing in tax-saving schemes or paying advance taxes, among others, creating redemption pressures.  Further, according to the expert, the flows are comfortable when compared on a year-on-year basis.

In the same interview, S Naren pointed out that small and midcap stocks are appearing to be costly. “We also have to see that we are coming of a situation where mid and smallcaps are costly,” he said adding that the prospects up to medium term may not be very high. “If investors are willing to put money for 5-10 years, the market overall will give you many opportunities,” he said.

According to Naren, rising global interest rate could be a major worry for the stock market. In the global economies, growth is seen picking up. I thought the real issue could be due to much higher interest rate scenario,” he told the channel.

In the same interview, S Naren noted that IT sector could provide returns to the investors when the overall market is not performing well. It is not a sector which will do well when the market will give 20 percent returns, he said. Naren observed that IT sector had underperformered all through the bull run in 2017, and started performing better when the market started falling in the past few months.

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