Deluge of investors to invest in debt MFs before March ends
While the market is always changing, these insights from Agarwal and Jain provide valuable guidance for investors looking to make informed decisions about their financial future. By staying up-to-date on market trends and seeking the advice of financial experts, investors can position themselves for success in any economic climate.
Mutual fund investments where not more than 35 percent is invested in equity shares of Indian companies will now be deemed to be short-term capital gains. This applies to investments made on or after April 1, 2023 and will impact flows into debt funds, gold funds, and international funds.
However, before the changes kick in, Nishant Agarwal, Senior Managing Partner and Head-Investment Advisory at ASK Private Wealth, sees the influx of investors putting their money into debt mutual funds (MFs).
“A good part done in this Budget is to grandfather existing investments for this financial year. So no investor needs to rush and get out of the debt mutual funds to avail indexation benefit. What it also brings to table is to invest debt money before March 31. Any investment which is made in this financial year - till the time, it is held – will continue to avail indexation benefit and the advantages which indexation in long-term follows, so we have seen a deluge of investors who are looking to invest in debt fund in the next one-three months are preponing their investment till March 31, so that they can take this preferential tax regime by investing in the next three-four days,” he said.
He also noted that investors have been redeeming from MLDs (market-linked debentures) and shifting their investments towards debt MFs.
“Investors who could sell their MLDs to gain tax advantage were sitting on liquidity and if you make investment in debt mutual funds before March 31, you will get advantage in future,” he said.
Agarwal's advice for investors is to maintain a neutral asset allocation, spreading their investments across debt, equities, and global markets. This balanced approach can help minimize risk while still allowing for potential growth.
“Currently we are maintaining a neutral asset allocation between equity, debt and global,” he said.
Rahul Jain, President and Head at Nuvama Wealth, also spoke with CNBC-TV18 about the current state of the market. Jain predicts that there will be renewed interest in bank deposits, as investors seek a safe and reliable place to park their money.
“We will see a renewed interest going for bank deposits because it brings a lot of convenience,” he said.
In addition, he sees buying in high-ticket insurance policies as another area of growth.
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