What ‘Mutual Funds Sahi Hai’ campaign has done to investors: Dhirendra Kumar of Value Research decodes

Domestic mutual funds in the past three and a half years have seen a consistent net inflow totalling billion so far. (Reuters)

The line ‘Mutual Funds Sahi Hai’ is ubiquitous, from huge billboards, to television  advertisements, radio and every other possible medium of advertisement. According to Dhirendra Kumar, the CEO, Value Research, it has caused provoked investors to reconsider their asset allocation strategy, and opened up mutual funds as an important investment vehicle.

In an interview to ET Now, Dhirendra Kumar said, “There has been a one and a half years-two years buildup to this Mutual Fund Sahi Hai campaign in a declining interest rate and the decline in gold and real estate regime. I have come across so many investors who are now rethinking all that they have done in the last 10-15 years.”

Mutual fund investing in India has reached unprecedented levels as investors pumped in a staggering Rs 20,362 crores into equity mutual funds in August, taking the tally of the overall industry AUM to Rs 20.6 trillion. The numbers are mind-boggling, given that the investors have put 60% more money than the previous month of July wherein the equity inflows totalled Rs 12,727 crores. On his outlook going forward, Dhirendra Kumar said, “My take is that these are still early days of DII flows into mutual funds and the factors which drive this growth are fairly straight forward and they continue to prevail.”

Interestingly, money coming in through SIPs has also scaled a new record with Rs 5,206 crore in August. A record 7,00,000 new SIP accounts were also opened during the month, taking the total tally of such accounts to around 16 million. According to Dhirendra Kumar, SIPs are still in early stages. “If you look at the component of flows into the market, the SIP is still not a very significant component of the kind of money flowing into mutual funds. But it is quite meaningful and sustainable and that will provide a very good base for investors because the money that has come through SIPs is also very patient money,” he told the channel.

Going forward small caps may not be attractive says the expert. “Small caps are not the ones to derive your return from. In fact, if you look at one thing that have happened very substantially, that old investors are investing in balanced fund and they are beginning to believe in the dividend derived from those balance funds,” he pointed out. Dhirendra Kumar also drew up a list of funds suited to conservative investors. “I have listed five-six of them; Birla Sun Life Frontline Equity Fund, Franklin India Balanced Fund, HDFC Balanced, ICICI Prudential Focussed Blue Chip and L&T India Prudent Fund and SBI Balanced Fund. These are the large caps and the balanced funds which will be suited for most conservative investors,” he told in the same interview.