As the markets crashed with Sensex losing more than 1000 points on 24th October, mutual funds have not faced much redemption pressure, though the NAVs of their equity schemes would have seen erosion in their value.
A couple of mutual funds have even noticed inflows at these levels, said a fund manager.
While there is not much unanimity of fund managers view as far as the bottoming out levels are concerned, most feel that investing in mutual funds is a safer bet in these times.
“Invest money that you don’t require for 3 to 5 years. Sustainable investments assures better returns,” said Mr Waqar Naqvi, Chief Executive Officer, Taurus Mutual Fund.
“One should keep investing at all levels. You don’t know whether this is the bottom or there is a further down.”
It seems to be a Diwali sale and investors should invest at these levels, which are at a huge discount, said Mr Paras Adenwala, Chief Investment Officer, ING Investment Management.
The bottom levels of the market cannot be predicted but there is tremendous value in the market, subject to the global market behaviour, said Mr Adenwala.
The recent falls have presented the investors an opportunity for investors who under-own equity to increase their exposure to equity as an asset class, said Mr Sanjay Sinha, Chief Executive Officer, DBS Cholamandalam Asset Management.
While the view of fund managers is that it is the right time to start investing considering that the fundamentals of the economy are still intact, some raise doubt over whether there will be interest of retail investors considering the gloom in the market.
While FIIs are pulling out money, the question is that what is going to replace those investments, said Mr Rajiv Vijay Shastri, Lotus India Asset Management Ltd.
The advice to the retail investors is to start investing at these levels, but the concerns is that whether they have the money or the ability to invest, he said.
Those who have invested in systematic investment plans should not exit now and those who want to do one-time investment should wait till the market bottoms out, said a fund manger.
According to fund managers, mutual fund investors have mostly been staying invested despite the huge market fall as they would expect the market only to rise from now on.
In India, an investor exposure to equity is relatively low compared to other financial assets. So even though the markets have fallen substantially in the past few months, the value erosion of total investments is not much, said Mr Sanjay Sinha, DBS Cholamandalam Asset Management.
Market has been continuously falling for weeks and to a large extent mutual funds have been holding cash, in some cases even 35 per cent, said Mr S. Krishnakumar, Fund Manager & Head Research, Sundaram BNP Paribas Asset Management Company Ltd.
Though comparatively smaller portions are being invested, mutual funds are waiting for a bottoming out of the market for further investments, he said.
Source : The Hindu Business Line (24-10-08)