Swarup Anand Mohanty, CEO, Mirae Asset says, last year we did soft closure of Mirae Asset Emerging Bluechip Fund. This shows our commitment towards safeguarding investors' interests
The mutual fund industry is in a sweet spot and is gaining incremental assets every month as investors shift allocation from physical to financial assets. 2017 has been a landmark year for Mirae Asset-- our parent Mirae Asset Group completed 20 years and crossed $100 billion in assets. Mirae Asset Mutual Fund also entered its 10th year of fund management in India, with the AUM growing by 85 per cent this calendar year and standing at about Rs 12,000 crore. We witnessed a significant surge in investor folios and monthly SIP flows grew from Rs 29 crore in March 2016 to Rs 155 crore in September 2017.
Managing return expectations
Equity investors have started understanding volatility and accepting it as an opportunity to create wealth via equity funds. Investors have not only stayed invested but have also started buying at dips. This will augur well for them in their wealth creation journey and meeting future goals.
However, as of now, I cannot say the same for debt fund investors. They don't invest across debt fund categories (as they do in equity), and haven't yet understood volatility as an investment opportunity. The principles of investing are the same, whether it's equity or debt.
We are cognizant that risk to portfolios could be due to both stock selection and portfolio construction. When the market is influenced by flows, fund managers need to stick to long-term investment framework and significant deviations are not taken. At the portfolio level, we continue to follow reasonable diversification to mitigate stock specific risks.
Rising industry assets
The industry is witnessing strong inflows in equity funds, especially in mid-cap and balanced categories, with many funds growing significantly in size. The challenge is to remain true to the label and maintain the consistency in performance so that the investor's investment experience is not diluted in favour of asset gathering.
Last year, we did soft closure of Mirae Asset Emerging Bluechip Fund. We stopped accepting fresh purchases and restricted the inflow in the form of SIPs (up to Rs 25,000) as the fund had started receiving unprecedented inflows. The decision showed our commitment towards safeguarding our investors' interests.
Growing clout of domestic funds vis-a-vis FIIs
The clout of domestic investors on Indian stock markets have never been as strong as it is now. This is because a large section of investors have shifted allocation from other asset classes like gold and real estate. This is reflected in SIP subscriptions. Mutual fund equity inflows and stock market performance are developing a positive correlation.
Outlook for equity and debt
Presently, Nifty is trading at 17x FY19E EPS, which is at a premium historically. But a higher PE should be seen in the context of earnings improvement and relatively lower interest rates going forward.