Hello Readers!!

After the market witnessed a good downfall in the month of March last year, investors of Equity funds, slowly and gradually started withdrawing their investments out of fear to lose money. This resulted in a negative inflow in Equity funds.

However, after a long wait of 8 months, the equity fund has again registered a positive inflow in the month of March 2021. As per the reports, the equity funds registered a net inflow of Rs 9,115 crore. Inflows through systematic investment plans (SIPs) also rose to Rs 9,182 crore (the highest amount ever) in March 2021. 

This tragic rise was witnessed at a time when the experts started to believe that there is very little hope of retail investors to come back to Equity mutual funds. Somewhere they had also in their mind that these investors are now all prepared to switch over to investing in equities directly. However, the investors are back and with a good bang!!

Well, experts are now in dilemma, will this comeback of investors to Equity funds is temporary, or will investors continue to invest in Equity mutual funds from now?

Investors Moved Towards Trading!!

During the long lockdown imposed in India last year, people were working from home, they had enough time after they complete their office work as they were saving traveling time, hangout time. In their spare time, they took their interest in trading in the share market, especially the young investors, who were attracted most.

As per a report, it was stated that around 10 million new Demat accounts were opened in 2020. The second reason that attracted investors towards the share market was its fast rebound in the month of April 2020, from the steep fall in the market in March 2020.

However, time changed. Slowly we started coming back to normalcy. Although, COVID-19 case rise is again at the peak, and soon we will be hearing severe restrictions or partial lockdowns in some parts of the country, but the economic activities are coming back to normalcy.

If we have lockdown back in some parts then we must not forget that our vaccination drive is also on the surge. The lockdown imposed last year was not easy for many, there were many who faced job loss, financial crisis, that was no more than a threat to their life. Thus, experts believe if lockdown gets imposed this year also, it will not last as long.

Hence, once the market opens up completely, people go back to their work from the office, surely the full-time job holder will get less time to trade in the market. In that scenario, obviously, they will find up security that consumes less effort and time. And what’s the best alternate of share market, other than the Equity mutual fund!!

Fear Of Missing Out!!

Last year when the Equity fund started showing volatility and their return turn negative, investors instantly withdrawn their investment, they even didn’t wait for volatility to get normal. But they regretted their decision once the Equity fund market showed a sharp rise in the last months of the year. The correction that they expected did not happen till the end of February 2021.

The good rise in the inflow of the equity market in the month of March 2021 can be taken as a result of the FOMO (Fear-Of-Missing-Out) syndrome.

There are still many events happening globally like the return of lockdowns, rising geopolitical tensions, falling rupee value against the US dollar, and inflation, that can play as a spoil-sport for the Equity fund investors, but this time, it seems that investor shave now made up their mind. This time it seems that they are less likely to quit from Equity funds if they start going upside down.

“Historically, after a year of extremely good returns, stock markets tend to consolidate. Investors should not consider equity investing to be an easy money-making tool,” says Rupesh Bhansali, Head- Mutual Funds, GEPL Capital.

Should I Continue To Invest Or Take A Break From Equity Funds?

Experts advise that if you are investing in Equity mutual funds, then continue to invest, only have a regular check on your asset allocation. Do not invest your entire surplus on corpus in equities. Experts advise a good allocation in equity helps your investment grow. But a good allocation in Debt along with that, helps your equity fund grow without any short-term disturbances like partial withdrawal for sudden short-term money requirements. 

If you can’t really figure out the right asset allocation, a standardized product such as a balanced advantage fund helps. Stay away from the sector and thematic funds, unless you have a good understanding of those.

Keep reading for more updates on Mutual Fund Investment!!

For any kind of query you can contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.

Happy Investing!

(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).