HNI investors: MF Talk: Showing signs of maturity! Retail & HNI investors bought during June 4 selloff: Viraj Gandhi

In an interview with ETMarkets, Gandhi said: “In our interactions we saw retail investors showing a lot of maturity in such volatility, which is a positive surprise for us and bodes very well for our markets,” Edited excerpts:

Equity flows almost doubled in May 2024. What could have led to the rise in the flows?
The expectation of Modi-led government to form with a majority was the major factor and also new fund offers (NFOs) during the month which mobilised fresh Rs 10,140 crores which helped in record flows for the month of May 2024.

SIPs also topped nearly Rs 21,000 cr. Can some of it be attributed to top-up or additional SIPs done to factor in election day volatility?
Election result week volatility was very high and was attributed to higher expectation of seats tally and subsequent disappointment of actual numbers.

SIP is always done with a long-term view and therefore should be minimal factor for volatility of result announcement.

We saw FII buying on Monday i.e. 3rd June and DII sell figure, while on 4th June when we saw nosedive from markets FII were heavy sellers and DII bought the fall.

This clearly indicated lumpsum was the mode of investment to make best use of such a fall from investment perspective and less of SIP in this anticipation.

Despite volatility in the broader market space – small & midcap funds attracted 2700 cr but not so much in the large-cap space which most experts are advising now. What are your views?
Midcap & Small cap is the new normal currently. It is evident from the chart. Midcap scheme which was 81% of large cap schemes AUM has for the first time surpassed it in the month of May 24.

ETMarkets.com

In fact, the growth in small caps is even higher, since the proportion of small caps to large cap AUM has growth from 61% a year ago to 84% now.

Both these segments have given superior returns compared to large caps in the previous 24 months and money in today’s era chases performance.

We believe the tide will remain the same in the near future and AUM growth in large cap will be relatively lower than mid and small cap schemes.

Even though the fixed income space fell more than 70%, but strong inflows were seen in liquid funds. What is the trend that you are seeing in the fixed income space given the fact that equity markets are trading near record highs? Do you see some churn?
Equity-related flows will remain stronger in the near term and to that extent we will see relatively less growth in debt-oriented schemes.

Debt schemes will attract higher flows when we will see major correction in the broader index until then this trend shall continue.

In terms of NFOs there were many index funds, as well as thematic funds, were launched. What is fuelling the trend?
Thematic funds had the crown this month as we are going through a massive up move in the markets since last April and specific sectors and strategies have outperformed by a BIG margin and past outperformance always attracts a lot of capital which could be the reason behind this trend.

Retail investors are now becoming more aware of when to put the money and this is evident from the fact that most investors wanted to buy the dip post-election results. What are your views when you interact with the clients?
Quiet contrary to our thoughts, retail and HNI investors actually bought heavily in the fall on result day and was quite the opposite for FII.

In our interactions we saw retail investors showing a lot of maturity in such volatility, which is a positive surprise for us and bodes very well for our markets.

What would you advise investors for June?
Our advice will always be for the medium to long term to all investors. Invest in the India story and by far this is the strongest story available in the peer set.

Within the story find the themes that are best suited to capture version 3.0 of the NDA government and policies that are expected to shape up.

Make proper allocation through flexi cap, identify proper small cap theme and x factor shall come from thematic schemes.

Use volatility in markets to your advantage and ride the tide. We believe the best phase of wealth creation for Indian capital markets have just started now.

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