S&P BSE Sensex*	Re/US $	Gold Rs/10g	Crude ($/barrel)	FD Rates (1-Yr)
33,314.56 |-371.00 -1.10%	64.64 | -0.03 -0.05%	29,480 | 285.00 0.98%	63.68 |3.27 5.41%	5.0% - 6.75%

When demonetisation was announced on November 08 last year, the initial reaction of the market was extremely negative. And, the equity markets got the jitters.

However, as the economy slowly recovered and  it absorbed the shocks of the note-ban move, markets had not only rebounded, but have scaled new heights. One year on, broader equity indices are up about 20% and many individual stocks have gained more than 100% — mid and small caps dominate this list.

Between October 2016 and October 2017, the Mutual Fund AUM (Assets Under Management) grew 31.5% from Rs 16.29 lakh crore to Rs 21.41 lakh crore. Equity AUM (including AUM of balanced and tax saving schemes) jumped 56.7% from Rs 5.46 lakh crore to Rs 8.55 lakh crore.

Post demonetisation, a tsunami of deposits hit banks. As a result, banks have been slashing deposit rates at frequent intervals. Moreover, in the absence of higher credit growth, other fixed income instruments too are offering low to moderate interest rates. Post demonetisation, demand for gold and real estate has waned, and so, these asset classes have generated weak returns — causing even higher outflows from them. Compared to that, equity markets have been going from strength to strength and attracting new investors. This has been the primary reason why mutual funds have been seeing higher investors’ participation.

Other factors driving the industry AUM are:

1. "Mutual funds sahi hai" campaign has created awareness among novice investors. The campaign has taught investors how mutual funds can assist them in fulfilling their financial goals.
    
2. Systematic Investment Plans (SIPs) being the most convenient way to invest in equity markets, through mutual funds, has created a positive perception in the mind of many investors. The word-of-mouth publicity is playing a crucial role in making SIPs the most preferred route of retail investors.
    
3. Markets are scaling new highs and the government is introducing big bang reforms. Implementation of GST is likely to improve tax compliance and eventually, the government’s revenue. In other words, the government will have more money to spend on the developmental projects. It has made some crucial announcements which include plans to recapitalise Public Sector Banks (PSBs), and intend to spend more on infrastructure development among others.
    
4. Political stability and reformist agenda of the government has created a positive sentiment among investors. From time to time, it has demonstrated its ability to take tough decisions. The government and RBI have been taking firm steps to fix the chronic problem of Non-Performing Assets (NPAs). As a result, investors have been overlooking high valuations of Indian markets and yet betting big on them.

Mr Sundeep Sikka, executive director and CEO of Reliance Nippon Life AMC shared his perspective, “From Jan Dhan to demonetisation, government’s initiatives have helped in moving Indians away from physical assets to mutual funds. Post demonetisation, more money is coming into the banking system. This money will find its way into capital markets.”

Those who believed demonetisation may keep the markets under pressure indefinitely, opted out and stayed in the cash bracket. For such investors, the current rally has been nightmare as they never got an opportunity to re-enter the markets.

What investment approach should you adopt at this juncture? 

First and foremost, adopt a higher emotional intelligence in all financial/investment matters. Erase the feeling of having lost out on big wins, if you couldn’t participate in the current market rally. 

Isn’t it time for you to analyse what went wrong and why you missed out on this rally? 

Thus, choose to invest in Systematic Investment Plans (SIPs) which help you deal with the market volatility; ensure you are invested at regular intervals, irrespective of the index level. 

There’sPersonalFN to your help, who can power your investment decisions with unbiased research recommendations on mutual funds. PersonalFN follows a rigorous research process to help you, investors, select the best mutual fund schemes for your investment portfolio. At PersonalFN, along with quantitative parameters such as performance, qualitative parameters such as portfolio characteristics are considered while analysing mutual fund schemes. With over decades of experience, PersonalFN has put together a research report on potentially the best mutual fund SIPs for your long-term portfolio — The Super Investment Portfolio – For SIP Investors. Under this, we conduct a detailed analysis on how SIPs in the top shortlisted mutual fund schemes have performed, across multiple market conditions and timeframes. Only those funds that successfully pass this evaluation are chosen. Don’t miss out on early bird discounts. Subscribe to the report here.

Here's Why Retail Investors Will Invest In ETFs…

There’s a consensus building among mutual fund industry players —“Exchange Traded Funds (ETFs) will drive the industry growth in future.”

One of the latest reports released by PwC (PricewaterhouseCoopers) estimates that the global ETF industry will touch US$ 7 trillion mark by 2021. Robo-advisors and SEBI Registered Investment Advisors (RIAs) are likely to drive the ETF AUM (Assets Under Management).

At a recent BSE-organised 3rd annual thought-leadership summit — ‘A mammoth on the move’, industry veterans agreed with  the PWC report.  They opined that the same factors expected to drive the global ETF industry will contribute to the growth of the Indian ETF industry in the coming years as well.

According to Mr Yogesh Bhatt, a fund manager at ICICI Prudential Mutual Fund “Currently, the money in the ETF market is coming through institutional investors only. The retail participation is minuscule. However, with the advent of robo advisors, we believe this is set to change.”

Mr Vishal Jain, Head of ETF, Reliance Nippon Mutual Fund shared similar beliefs, “Since RIAs do not work on commission model, there is no incentive to sell active funds. In fact, fee based advisors draft investment portfolio of their clients purely with the set of ETFs. This will happen in India too with the growth in the number of RIAs.”

Echoing their views, Mr Navneet Munot, CIO of SBI MF said, "Globally, institutional investors adopted ETFs and then retail investors followed them. I believe this will happen in in India too. In fact, we have been witnessing retail participation in equity markets through ETFs. ETFs will get more popularity once other pension funds start investing in equity through ETF route.”

PersonalFN is of the view that, you shouldn’t invest in ETFs blindly. If you are new to investing, ETFs might be a good starting point for you. These can help you capture the performance of an index or the asset class as a whole. However, while investing in equity-oriented ETFs, stick only to those mirroring the performance of broader equity indices. Moreover, Gold ETFsremain one of the best options to investing in gold.

To read more about this story and Personal FN’s views over it, please click here.

Should You Invest In Mutual Funds With Large AUM? Know Here...

In June 2011, HDFC Top 200 was the first equity-oriented mutual fund scheme to garner a corpus of over Rs 10,000 crore. Little over a year later, another scheme from the same fund house, HDFC Equity Fund, featured on the list.

During the prevailing volatile market periods, mutual funds struggled to attract assets from retail investors. It took as many as three years for another fund to feature on the list. In March 2015, Reliance Equity Opportunities Fund became the third scheme to join the Rs 10,000-crore-club.

As the market began to rally and retail investor participation increased, the number of equity-oriented funds joining the Rs 10,000-crore-club improved almost every quarter.

As on September 30, 2017, there were as many as 16 schemes (including balanced funds) with a corpus in excess of Rs 10,000 crore. This number may increase as a few schemes are trailing behind by only a few hundred crores.

To read more and Personal FN’s views, please click here.

Fund Houses Crying Foul At SEBI's Mutual Classification Norms

Mutual fund houses are in a catch 22 situation these days.

And here’s the reason…

Recently, the Securities and Exchange Board of India (SEBI) issued detailed guidelines on the mutual fund classification — a move that’s expected to reduce the total scheme count by at least a fifth. When the new guidelines were rolled out, mutual fund houses had made encouraging comments showing  their preparedness to the likely scheme mergers and fulfilling other compliance requirements.

One month on, the mood has turned febrile.

Mutual fund houses have suddenly realised what initially seemed easy to comply with isn’t a cakewalk.

Media reports suggest that Association of Mutual Funds in India (AMFI) is likely to request the SEBI to reconsider mutual fund classification guidelines.

As you might be aware, the regulatory body recently laid down clear-cut guidelines on the permitted asset allocations for the equity-oriented schemes. Also, it has offered explanation on how the large cap, mid caps, and small caps would be defined for the asset allocation purpose.

To read more about this story and Personal FN’s views over it, please click here.

How Are Debt Fund Managers Playing The Yield Surge? Know Here…

Debt funds have been feeling the heat lately, especially those betting on medium to long-term papers. As you know, bond yields and bond prices share an inverse relation. And in the recent times, long term bond yields, guided by the movement of 10-year G-Sec, have been rising steadily. The primary reason for this shift is unlikeliness of RBI slashing policy rates further.

How the Yields are trending?

Data as on October 31, 2017
(Source: RBI, PersonalFN Research)

Moreover, during the first half of FY 2017-18; India's fiscal deficit has touched 91% of the full years' threshold. These two factors in conjunction don't bode well for the future of long duration bond funds.

To read more and Personal FN’s views, please click here.

Investing in an under-construction property is always risky. The primary reason is, if the builder goes belly up, homebuyers/investors are the last ones to have a claim on the money raised by the liquidation of developer's assets.

However, this practice is set to change soon. The Ministry of Housing and Urban Poverty Alleviation decided to award homebuyers the status of Primary Secured Creditor (PSC). The fulfilment of this long-standing demand has placed buyers on par with other financial institutions for recovery on their investments, at least partially, in case the builder goes bankrupt.

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Exchange-Traded Fund (ETF): An ETF, or exchange-traded fund, is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund. Unlike mutual funds, an ETF trades like a common stock on a stock exchange. ETFs experience price changes throughout the day as they are bought and sold. ETFs typically have higher daily liquidity and lower fees than mutual fund shares, making them an attractive alternative for individual investors.

Quote: “Don't look for the needle in the haystack. Just buy the haystack!"- John C. Bogle

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