Global jitters hobble equity MF managers in June

As of Monday, overall net investment by fund managers in June has been only Rs 81 crore, down from Rs 7,200 crore in May

India’s equity fund managers have significantly slowed their investment in stocks this month, with the ongoing global uncertainties.

However, inflow from investors into funds through systematic investment plans (SIPs) are steady. As of Monday, overall net investment by fund managers in June has been only Rs 81 crore. It was nearly Rs 7,200 crore in May.

A majority of the fund managers believe the impact of the British vote ('Brexit') to leave the European Union would be limited and that Indian markets and the economy are largely decoupled from the development. However, they say volatility will continue in Indian markets and opportunities of buying on dips will be in abundance.

Prashant Jain, chief investment officer (CIO) of HDFC Mutual Fund, says: “Brexit has led to sentimental impact on stocks which might be there for another few days. These will be opportunities to buy at a discount.”

MFs get Rs 3,300 crore as monthly flows through equity SIPs. This is quite steady and sticky money, enabling managers to make investment calls. Any lump sum investment in equities is a bonus for them.

“Brexit is a non-event and less of investments in June need not necessarily mean we are taking a directional call. There are bigger developments, going forward — the June quarter results which will start in a fortnight and spread of the monsoon. These will provide us enough opportunities to pump in cash,” says, the equity head of a private bank-sponsored MF.

According to S Naren, the CIO of ICICI Prudential MF: “We see Brexit as a buying opportunity in the long term. While it is difficult to predict market movement in the short term, the recent correction offers a long-term buying opportunity for investors. I will be concerned if the monsoon turns adverse, not Brexit. We believe a normal monsoon is one of the most important factors for the markets.”

For a little over two years, fund managers have had a strategy of ‘buy on dips’. Robust inflow from individual investors in equity schemes have offered enough cushion to managers to strategies their investment decisions.

In the past two years, inflows in equity schemes have been Rs 1.5 lakh crore and sector experts expect these to continue.
MARKET SCENARIO AFTER BREXIT

• Inflow from investors into funds through SIPs are steady
   
• A majority of the fund managers believe Brexit impact would be limited
   
• Indian markets and the economy are largely decoupled from the development
   
• However, they say, volatility will continue in Indian markets and opportunities of buying on dips will be in abundance