AHMEDABAD: With profits made from individual stocks getting reinvested into equity mutual funds (MFs), the assets managed by equity-linked funds in Gujarat swelled to a record level in August. The current red-hot rally in the stock market has further fuelled their asset growth.
The asset under management of equity mutual funds in the state surged by Rs 7,763.8 crore at Rs 1.24 lakh crore in August as compared to Rs 1.16 lakh crore in July, shows data compiled by the Association of Mutual Funds in India (AMFI).
Apart from the increase in net asset value following soaring equity indices, fresh investment into equity-oriented schemes increased the mutual funds’ AUM, said analysts.
“Stock prices of several companies, irrespective of the size or sector, reported unprecedented surge, delivering returns that ranged from 2 to 6 times the actual investment within a year. Over a longer period, the returns in some cases were even higher. Some retail as well as HNI investors booked profit into individual stocks and reinvested a part of their gains into equity MFs,” said Jayesh Vithalani, an Ahmedabad-based financial analyst.
Analysts also attribute the fresh inflows into new fund offers and diversion of funds from real estate investments and bank deposits to the surge in investments in equity mutual funds.
“A couple of new fund offers were launched which attracted a lot of investments from retail as well as HNI investors, contributing to a major inflow in equity mutual funds. Moreover, there is diminishing interest among investors for fixed deposits and bonds due to limited returns. Therefore, people are diverting funds of matured fixed deposits into mutual funds which are promising good returns,” said Mumukshu Desai, director of an Ahmedabad-based financial advisory fund.
According to Desai, SIP inflows remained buoyant and touched a level of Rs 10,000 crore pan India. “The trend for SIP investments was bullish in Gujarat too with several new investors opting for SIPs and the rest continuing existing ones,” he added.