Mutual funds are a clear winner after demonetisation

The government move that greatly disrupted the economy in November last year may have added to the woes of most asset classes while proving to be a boon for mutual funds which has raked in substantial amount of money since then. Mutual fund investments has gone up by a whooping 196% to Rs 2.37 lakh crore in the one year period since the government's banknote demonetisation move in last November. It is a steep hike of Rs 1.57 lakh crore during the period (November 2016-October 2017) compared to the corresponding period a year ago when the total investments amounted to Rs 80,000 crore only. All kinds of investments under the Mutual Funds umbrella received a boost. It includes equity and balanced funds, equity linked savings scheme (ELSS), exchange traded funds (ETF) and systematic investment plans (SIP). During the month of November last year when demonetisation caught us unaware all four categories of equity linked funds-- balanced, equity, ELSS and ETF collectively mopped up about around Rs 15,500 crore. The trend has continued well into this year and between the July to October period collective net inflows for all four categories have flitted between Rs 22,000 crore to Rs 30,000 crore. A break-up of the pie is no less interesting. During the last twelve months (Nov '16 to Oct '17 ) following demonetisation investments in equity Mutual Funds which is the clear winner stands at Rs 1.23 lakh crore followed by balanced fund which had a net inflow Rs 75,000crore. While other ETFs has garnered over Rs 27,000 crore, ELSS had an inflow of Rs 12,000 crore during the same period. Rajiv Shastri, Executive Director & CEO, Essel Mutual Fund aptly observed, "Demonetisation had an indirect positive impact on the MF industry. As the real assets market staggered and more of the country's money entered the mainstream, a significant portion of it found its way to the one investment avenue that was performing and completely above board." Other asset classes like gold and real estate are not very profitable to invest in. With gold losing its sheen and real estate reeling under the twin problems of debt management and late delivery the Indian investor has warmed up to long term