Mutual fund managers' investment in equities declined by 27 per cent to over Rs.51,000 crore in 2016-17 due to volatility in stock markets.
However, fund houses are upbeat about the industry's performance in the new fiscal while expecting investment from new investors to fuel the growth of the sector.
As per data released by the Securities and Exchange Board of India (Sebi), mutual fund managers invested a net sum of Rs.51,352 crore in stock markets during 2016-17, lower than Rs.70,130 crore invested in the preceding fiscal.
In 2014-15, fund mangers had infused close to Rs.41,000 crore in stock markets — the first net inflow in six years. Prior to that, they had pulled out over Rs.14,000 crore.
“The equity market has overall been more volatile in 2016-17 than 2015-16 with a lot more negative sentiment. Investors may have seen the volatility of the year as a positive to average out costs,” said Srikanth Meenakshi, COO at FundsIndia.com, an investment portal for MFs.
Apart from equities, fund managers invested a staggering Rs.3.14 lakh crore in debt markets.
The past fiscal saw a surge in the number of retail investor accounts, or folios, in equity, equity-linked saving schemes and balanced categories, which grew by more than 58 lakh to 4.4 crore.
According to market experts, the mutual fund industry is at a take-off stage in terms of growth and Indian investors are warming up to investments in equity as an asset class.
“The positive net inflow in equities can be credited to maturity of retail investors who have come up in the 'learning curve' by contributing 1.3 crores monthly systematic investment plans (SIPs), adding more than Rs.4,000 crore per month in various top performing equity schemes,” Bajaj Capital Group Director Anil Chopra said.
A mutual fund pools the assets of its investors and invests the money on their behalf. It provides diverse investment instruments like stocks and bonds without requiring investors to make separate purchases and trades.