Anthony Heredia Discusses SIP Inflows and Market Caution

Key Takeaways

1. SIP flows are evenly distributed between multi-cap, flexi-cap, small, and mid-cap funds.
2. The proportion of new SIPs being opened in small and midcaps in the last six months has been higher.
3. Caution is advised for investors with time frames of less than two years, while investing in equity with a timeframe of five years or more is considered less risky.
4. There is a shift in focus back to the largecap category in the market.
5. Thematic fund flows reflect the broader outlook on the Indian economy and the opportunities that may arise in the next five to seven years.
6. The increase in e-mandates for UPI for mutual fund investments to Rs 1 lakh is seen as a convenient addition but not expected to significantly change fund flows.

The distribution of Systematic Investment Plan (SIP) inflows across different types of mutual funds, particularly focusing on the skewness of inflows towards mid and small-cap funds compared to large-cap schemes. Anthony Heredia, MD & CEO of Mahindra Manulife, provides insights into the distribution of SIP flows and the trends observed in the mutual fund industry.

According to Anthony Heredia, SIP flows are generally evenly distributed between multi-cap, flexi-cap, small-cap, and mid-cap funds. He acknowledges that there has been a higher proportion of new SIPs being opened in small and mid-cap funds in the last six months, which can be attributed to the recent returns in these segments. However, he also notes a shift in the trend, with investors showing interest in flexi and multi-cap funds in the last month or two. This indicates a potential focus on large-cap categories as well.

Heredia emphasizes the importance of caution for investors with time frames of less than two years. He advises that investing in equity makes sense when the time frame is five years or more, and caution is needed for time frames of 18 to 24 months.

Regarding sectoral and thematic funds, Heredia highlights the significant changes expected in the Indian economy over the next five to seven years. He mentions conversations about India becoming the third-largest economy and the potential opportunities arising from such economic growth. This outlook translates into themes that are expected to play out more than the average market, leading to the creation of thematic funds that align with these broader economic trends.

In response to the increase in e-mandates for UPI (Unified Payments Interface) for mutual fund investments, Heredia does not expect it to be a major game-changer. He acknowledges the convenience of digital investing in the mutual fund industry and sees the UPI increase as another addition that makes investing more convenient, particularly for larger SIPs.

In summary, the article provides insights into the distribution of SIP inflows across different mutual fund categories, the shifting trends in investor preferences, and the broader economic outlook shaping thematic fund investments.

FAQ

Q1: Are the SIP inflows more skewed towards mid and smallcaps than largecaps?

A1: No, SIP flows are not skewed towards mid and smallcaps. While lump sum investments have been in small and mid-cap funds over the last six months, SIP flows are evenly distributed between multi-cap, flexi-cap, small, and mid-cap funds. However, the proportion of new SIPs being opened in small and midcaps in the last six months has been higher.

Q2: What is the overall momentum in the market, and is caution needed for retail investors?

A2: Caution is advised for investors with time frames of less than two years. Investing in equity with a timeframe of five years or more is considered less risky. There is a shift in focus back to the largecap category in the market, and it is expected that SIP flows will reach Rs 20,000 crore in the next six to nine months.

Q3: What are the observations regarding sectoral and thematic funds?

A3: Thematic fund flows reflect the broader outlook on the Indian economy and the opportunities that may arise in the next five to seven years. The focus is on the dramatic change in the Indian economy and the potential opportunities that may emerge as a result.

Q4: How will the increase in e-mandates for UPI for mutual fund investments impact the market?

A4: The increase in e-mandates for UPI for mutual fund investments to Rs 1 lakh is seen as a convenient addition but not expected to significantly change fund flows.