Indian equity markets continued their upward trend with strong flows and new highs this month. There were multiple fronts which saw encouraging signs. Moody’s raised the rating from grade of Baa3 to Baa2 and changed the outlook from stable to positive; its first upgrade in India’s rating in 14 years.The government seems to be continuing their work towards continuous economic boosts and structural reforms .Substantiating the same is the announcement of the major recapitalisation plan for PSU banks and the thrust being put on infrastructure related capital expenditure outlays. India’s improvement in ranking of “ease of doing business” is also good news. Further the disruption caused bydemonetisation and implementation of GST seems to be settling down and we are seeing (as per the data released by the Central Statistics Office) that the economy has grown at 6.3% in the June – July- September quarter of the current fiscal year, which is a welcome reversal of trend and breaks the cycle of five consecutive quarters of slowing growth.
All of the above mentioned actions and data points are keeping the investor mood upbeat.The AUM of the Mutual Fund Industry stood at Rs 21.41 Lakh Crore as on 31st October 2017 ( source : AMFI).The industry’s AUM had crossed the milestone of Rs 10 Lakh Crore for the first time in May 2014 and in a span of about three and half years, the AUM of the industry has more than doubled. The total number of folios ( which indicates the number of customers and also retail participation) stood at 6.32 Crores as on 31st Oct 2017.The latest inflows have been driven by increased participation in equity , equity linked savings schemes and income funds.
We believe and recommend to every retail investor to assess ones portfolio, take stock of their investment goals and investment horizons.Equities have outperformed all asset classes over a longer period of time. Hence,when ones investment horizon is long term, equity mutual funds continue to be an attractive and prudent investment option. Also for investors who have been investing in traditional products, short term debt funds and Hybrid funds could be reasonable options. Hybrid funds invest in both equity and debt instruments, wherein the main objective of such funds is to provide the best of both the worlds of equity and debt.
With traditional products like Bank term deposits giving lower returns investors are increasingly looking at Mutual Funds as a viable long term financial asset. This is being observed in the steady inflows in Mutual funds in India and the consistent growth in the number of customers investing into mutual funds. Whether we are witnessing a historic shift in trend in the savings pattern of an Indian household, or not, only time will tell.However we believe that this is the start of this trend wherein we will see more people shift to financial assets which will augur well for the country.
As we wind down to 2017, one realises that the old saying - “time in the market is far better than timing the market” continues to be more relevant in these times.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.