Investors raise exposure to equity funds amid pandemic: Cafemutual Survey

38% of MF distributors say their clients have hiked exposure to equity funds since last March, 16% said their clients have become risk averse, 46% say no change

Several investors have increased their exposure to equity funds despite the pandemic and ensuing lockdowns.  

Cafemutual’s ‘Mood of the Mutual Fund Distributor’ survey, which covered 361 financial intermediaries including mutual fund distributors (MFDs) and registered investment advisers, shows that 38 per cent of the MFDs say their clients have increased exposure to equity funds since March 2020. Only 16 per cent of the MFDs said their clients have become risk averse post the outbreak of covid-19. Another 46 per cent have not incorporated any change to their investment portfolio.  

Flexi-cap funds are the current favourite among investors, with 43 per cent respondents saying these schemes are drawing the highest demand followed by mid- and small-caps (28.25 per cent) and large- and mid-caps (21 per cent).

Short duration funds are witnessing highest demand in the debt category, followed by banking & PSU funds and corporate bond funds, according to the survey.

Emerging fund categories that have gained popularity include balanced advantage funds (53 per cent) and international funds (39 per cent). A significant percentage of MFDs (45 per cent) said that they are likely to recommend passive funds.

Over 90 per cent of the respondents saw a surge in demand for health insurance in FY2021 as compared to the previous financial year. Demand for life insurance products has also increased, says 65 per cent of the total respondents. The rise in demand for crypto currencies (16.6 per cent) has exceeded PMS (10.5 per cent) and AIFs (4.7 per cent).

Overall, 50 per cent of distributors saw a surge in business in FY21, with 48 per cent of the respondents saying they have acquired new clients during the period.