Assets Under Management (AUM) of the mutual fund industry jumped over 32% in the last one year. Since gold and real estate generated average returns over the past few years, equity markets have suddenly become hot property.

Demonetisation and GST played their role in the growing share of financial assets in the average household savings.

The mutual fund industry is witnessing continuous inflows through Systematic Investment Plans (SIPs) like never before. This is no more a secret. 

Investment awareness campaign—Mutual Funds Sahi Hai—run by the Association of Mutual Funds in India (AMFI) is yielding results. Besides, the reasons mentioned above, Sahi Hai has pushed investors towards equity investments.

The aggressive campaign by AMFI was so successful that it led the Securities and Exchange Board of India (SEBI) to advise AMFI to tone down the aggression. The regulator feared the campaign might give a false comfort about the long-term prospects of mutual funds, and may even lead to mis-selling.

This is more interesting…

The growing participation of investors from the smaller towns will definitely grab your attention.

Between December 2016 and December 2017, the asset base of the smaller towns has soared 47%, from Rs 2.85 lakh crore to Rs 4.20 lakh crore. Investors in the smaller town are betting big on the equity markets. Equity AUM of B15—cities Beyond Top 15, forms 60% of their total AUM.

Nonetheless, the contribution of B15 is just 18.5% in the total AUM of the industry, which stood at Rs 22.60 lakh crore in December 2017. In other words, while smaller towns are catching up fast, Tier-I and Tier-II cities still remain the top drivers for the industry.

As far as the equity assets are concerned, Maharashtra dominates the tally followed by Delhi and Gujarat. These three regions put together an account for over 54% of the equity AUM. Karnataka and West Bengal secure fourth and fifth slots respectively.

Interesting facts…

• Equity assets account for 38% of the total AUM of the industry
• Only 16% of the equity assets come through direct plans
• Only 7% investors investing in equity-oriented funds invest in direct plans
• 84% of total equity assets come from individual investors
• Of total investments of individual investors in mutual funds, about 67% are in equity-oriented schemes.

Indian markets are making new highs frequently now. At the time of writing this article, the leading equity indices are in unchartered territories.

Now the question is how high will they climb from here? And how should you position your portfolio at this juncture?

Answers are simple: First and foremost, don’t look at the index level and speculate. Second, follow some basic rules.

These are as follows:

• Always invest in equity mutual funds for the long-term
• Consider your financial goals and risk appetite before investing
• Don’t chase momentum, nor try to time the market. Opt for SIPs instead
• Invest only in mutual funds that have a proven track record
• Prefer direct plans over the regular ones as they have lower expense ratio
• Don’t fall prey to the false promises and commitments of mutual fund distributors and relationship managers. Equity investments can never generate guaranteed returns
• Revisit your portfolio once in a while

But all this is easier said than done. Finding the RIGHT mutual funds is not easy, and finding the right SIP-worthy ones is even harder.

PersonalFN is glad to bring you the best mutual fund schemes backed by its research to start a SIP. Subscribe to The Super Investment Portfolio and get a list of five time-tested, lucrative SIP-Worthy equity mutual funds that can be invested in either separately or as a portfolio.

Try our SIP Calculator to find future value of your SIP contributions.

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