In terms of net mutual fund flows in the Equity category the Flexicap category led the pack. It was followed by focused, sectoral/thematic and large and mid-cap in that order. The balanced advantage category saw the highest increase on the back of a large NFO. The GDP growth print and increasing pace of vaccination was the other encouraging news in August. Nominal GDP grew 31.7 percent YoY in 1QFY22, against a contraction of 22.3 percent YoY in 1QFY21 and the pace of vaccination increased to 8.4m doses per day in the last seven days of August. 1QFY22 earnings were broadly in line with street expectations, prompting consensus estimates to hold on to their full-year FY22 Nifty EPS projections. Big is certainly getting better – In spite of a very severe second wave, large companies (ex – financial) were able to control costs while maintaining pricing power to increase their EBIDTA margins and profitability. EPS growth over the next two years will eventually determine whether markets should sustain these valuations going forward.
AMFI releases monthly mutual fund data, experts react
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Umang Thaker, Head of Products, Motilal Oswal AMC:
Aashish Somaiyaa, Chief Executive Officer – White Oak Capital: A granular look at the data of equity and balanced/balanced advantage category of schemes suggests that the gross flow, the redemption and the net flow for the months of July and August remains to be at the same elevated level. But there is significant shrinkage in the net flow for the equity category and a corresponding bump up in the net inflow of the balanced advantage category. This leads one to believe that on aggregate industry level large balanced advantage NFO has garnered a lot of traction by way of switches from equity to balanced advantage category. From a retail investors’ perspective in the short term, it may not be a bad development given elevated market levels and generally lower risk perception of balanced advantage funds.
Gautam Kalia, Head – Investment Solutions, Sharekhan by BNP Paribas: With the market reaching new highs every day, investors seem to have started booking profits resulting in lower equity inflows in Aug 2021 as compared to July 2021. Investors still seem to be optimistic about the markets as the category has been witnessing steady and positive inflows since March 2021. Value/Contra and ELSS funds continue to witness net outflows even this month. Focused and flexi-cap funds were the preferred investment choice this month with maximum inflows in these categories. The rally in the markets has attracted many conservative investors to also enter the market, which is the reason for the consistent growth in the hybrid funds category since the beginning of the year. Dynamic asset allocation funds witnessed the maximum inflow this month with almost six times increase in the inflow as compared to that of the previous month. After having witnessed, good inflows in the previous month, corporates seem to be losing faith in debt funds as inflows of only Rs 1,074 crore were recorded this month. Liquid and overnight funds that were the major drivers of the debt category witnessed outflows, which can be attributed to the lower returns in these categories or the shift of long term corporate money to arbitrage funds. Offshore funds continue to remain a preferred investment option for the retail investors as the category has witnessed consistent positive inflows since the beginning of the year.
Tarun Birani, Founder & CEO, TBNG Capital Advisor: The latest AMFI data suggests investors are favouring equities. Outflow in small-cap is in line with valuations in this space going high and higher inflow in dynamic asset allocation is in the right direction as investors are indecisive about allocating capital in pure equity strategy and valuation driven strategy in equity allocation is a better strategy. We are currently in the bull phase of equity due to easy liquidity and flows and learnings from previous bull markets is not to put entire money in equity and basis individual risk tolerance asset allocation should be done.
On life insurance sector | Nischal Maheshwari, CEO of Institutional Equities and Advisory at Centrum Broking: We remain invested. This is another way where you could have invested in an asset management company (AMCs). So this is another way to invest in that sector. I think the pick of the pack continues to remain Max Life out there where it is more reasonably priced, it is one of the more conventional insurance companies which is low on the market-related ULIPs. So I think that is our pick of the pack. But we continue to like HDFC Life and ICICI Prudential.