sips: Playing smart! Mutual fund investors booked profits at high but raised the bar on SIPs

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NEW DELHI: When the market hit all-time record high levels as FII dollars started flooding Dalal Street in November, what did mutual fund investors do? They seemed to have acted smart by taking some profits off the table but didn’t forget the time-tested formula of investing in a staggered manner for long-term returns.

Mutual fund industry data shows redemptions in equity funds, including ELSS and index funds, spiked 53.1% month-on-month (MoM) in November to about Rs 28,400 crore. However, the monthly SIP contribution increased to a fresh record high of Rs 13,306.49 for the month.

“Retail investors have evolved over a period of time. They believe in timely booking profits when markets are at higher levels and at the same time enter on every dip. Indian markets have been resilient and have ignored the global pessimism,” said financial advisory platform Fintoo’s Manish P. Hingar.

Industry experts say retail investors were seen booking profit from largecap funds and entering mid and smallcap funds as the broader market has underperformed.

“November data shows largecap category witnessed redemption of Rs 1,038 crore on one side, while on theother side, midcap category saw inflows of Rs 1,176 crore and smallcap funds received Rs 1,378 crore,” said Viraj Gandhi, CEO, Samco Mutual Fund.

Index funds and ETFs have been witnessing steady inflows, which indicates that investors could also be moving to passive funds as opposed to active funds in the largecap segment.

Because of the heavy redemption pressure, the net flow of money into equity mutual funds recorded a sharp dip of 76% MoM in November at Rs 2,258.35 crore vs an inflow of Rs 9,390 crore in October.

Suresh Soni, CEO, Baroda

Mutual Fund, said the mutual fund industry is seeing continued buoyancy from long-term money and people buying through SIPs. “On an MoM level, there can be small variations but the broader picture is that of strong growth and consistent flows in the Indian mutual fund industry,” he said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)



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