Equity mutual funds have not only offered investors with a safe inflow of steady income, but have also earned a whopping profit of Rs. 1,942 crore in the month of August, in spite of the fall in the outflow of several debt and money market funds by 4% in the domestic mutual fund industry. Several analysts credit this profitable performance of equity mutual funds to the cheap valuation of stocks, which offered a greater number of units to investors as compared to previous periods. Over the past 9 months, the market has witnessed a fall of approximately 17%, providing investors with a golden opportunity to purchase equities at much cheaper evaluations. This has enabled several high net-worth investors to make investments in the money market, as they can buy investments at cheaper rates and thereby, expect greater profits.
It is not always risky to invest in Mutual Funds. Although there is a certain degree of exposure to market fluctuations, they tend to fade off over time. This is majorly possible in cases where the investments are intended for a long term tenor. This mainly works on a simple factor. If the markets are on a rocky road, in the short term, it is not advisable to buy any more units or decide to opt out of that particular fund. Instead, wait for the disturbances to straighten out. It might probably take a month or even a couple of years but it will help you in the long run. You never know when the company may just turn out to become the next Infosys! If you ignore this simple functioning and make hasty calculations and move in and out of funds, the value of your funds will not only fade off but also may prompt you to opt for a personal loan or a home loan to finance your propositions to bridge the gap created by your faulty investments.
Systematic Investment Plans or SIPs, which offer investors a reliable mode to save their investments on a regular and steady basis, have also contributed enormously to the inflow of funds in the money market. Investors who have made investments in fixed income schemes, have now moved their investments to debt instruments and other bank deposit schemes. Non-convertible debentures are also proving to be a popular choice of investors. These trends account for funds that have been transferred from liquid and income funds in the month of August. According to reports, investors flocked to purchase the non-convertible debentures offered by finance houses like Shriram Transport, Shriram City Union Finance, and India Infoline. Shriram Transport proved to a pioneering leader in the field of non-convertible debentures, issues them to raise an amount as high as Rs. 1,820 crore, while it collected sums of Rs. 1,300 crore from its retail investors. Shriram City Union Finance and India Infoline also performed considerably well in the issuance of non-convertible debentures.
Investors who made investments in Equity Linked Saving Schemes (ELSS), balanced funds, or in what is considered to be the ‘safe haven’; gold exchanged traded funds, were also not disappointed as these funds brought in Rs. 44 crore, Rs. 210 crore, and Rs. 494 crore respectively. On the contrary, liquid funds and income funds had to face redemption of approximately Rs. 17,000 crore during the month of August. While investments in gold are the norm of the season due to their consistence and profitability, Gold Exchange Traded Funds also outperformed their previous term, and offered a return of 47% over the last year, while equity funds brought back negative returns of approximately 10-11%. Gold Exchange Traded Funds and Feeder Funds in gold did not disappoint investors as their net investments had risen from Rs. 3,581 crore in the month of January and doubling to more than Rs. 7,578 crore in the month of August.