MF participation to increase as interest rates low: Aditya Birla Sun Life AMC

Mutual fund (MF) data for the month of August is out. Equity schemes have seen net inflows of Rs 8,057 crore, which is an over 60 percent drop versus July.

A Balasubramanian, managing director and CEO at Aditya Birla Sun Life AMC, believes that there has been increased interest that is getting generated. Therefore, more and more investors will participate in capital markets through MFs.

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“The way the industry has been growing suddenly in the last six months, the flows have been rising and deeper penetration of the industry has been happening day by day. Given the fact that interest rates continue to remain low, there is no other asset class in general that can be used for savings purpose, so MFs are gaining more prominence. Lastly, the MF performance –especially if you pick up the equity performance in the last one year, the experience of investors whether it is for a year, three years, five years or ten years, isn’t quite substantial, so that being the case, I would assume an increased interest in MFs is getting generated,” he said.

One of the trends he has seen emerging from the last 3-4 years is that good initial public offerings (IPOs) get good response and get subscribed, and post listing also the interest level stays.

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“Money managers in general will be able to find an equally good number of opportunities. Even in the secondary market, there are so many companies listed in that space and the company performances keep rising, I would assume that the broader interest in the market will continue to remain and money managers will stay focused on that,” he said.

According to Kailash Kulkarni, CEO of L&T Mutual Fund, people are moving a little bit into more conservative schemes. “That is why schemes like balanced advantage schemes or arbitrage schemes seem to be finding favour,” he said.

Kulkarni doesn’t expect to see people moving out. However, at the same time, because of the elevated market conditions, people are choosing to be a little more conscious and safer, he said.

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“Also, a lot of first-time investors are coming into the market and it is always good for a first-time investor to try out products like balanced advantage funds or a hybrid category before moving into pure equity, so it is a good sign that the market is maturing,” he added.