Direct mutual fund investors hit most in the recent market correction
, ET Online|
Feb 15, 2018, 12.38 PM IST
Mutual fund advisors are getting frantic calls from panicky mutual fund investors, mostly direct investors, after the recent volatility in the market. The bull run in the stock market saw a large number of new investors coming to the equity mutual funds fold. Most of these new investors were direct investors, or those who did not seek the help of a mutual fund advisor for their investments.
“Many investors call us up to ask whether they should stop their SIPs or is it worth investing in mutual funds anymore. These are all direct investors who are directionless after the recent market volatility and the buzz around LTCG tax,” says Harpreet Singh, Founder, Vserv Capital Services. He adds that many of these investors are still not getting in touch with mutual fund advisors. “Some investors are still not getting help. This might result in bad investment decisions,” says Singh.
Many direct investors are seen asking questions about whether their investment decisions are in the right schemes on various mutual fund forums. Some investors are also approaching the mutual fund advisors for help, but in some cases, it is too late. “Some investors call us and tell us about the investments they have made. They are worried because of the volatility in the market and are invested in smallcap schemes which were hit the most. Now, we can’t even help them because redemption is not always an option,” says Puneet Oberoi, Founder, Excellent Investment Advisors.
AMFI data shows that the mutual fund industry added about 9.26 lakh SIP accounts each month on an average during the FY 2017-18, with an average SIP size of about Rs 3,300 per SIP account. More new investors started flocking to mutual funds as the markets started running up and touching new highs every week. “These investors were happy with their investment decisions when the market was running up. Every scheme was giving good returns, so they forgot about their risk appetite. After the correction, they have nowhere to go. Now they are making frantic calls to advisors. This should have been the first step,” says Harpreet Singh.
Many investment experts believe that new investors shouldn't invest without consulting an advisor. But many small investors do not see a point in paying the advisors for making a small investment. “Paying for advice is still not a norm in India. When the markets go up, everyone runs after returns and when the market falls, everyone runs after the advisor. If you stick to an expert from the beginning, you will save yourself the cost of unnecessary redemptions, loss of capital and most of all your peace of mind,” says Neeraj Chauhan, CEO, The Financial Mall.
“Many investors call us up to ask whether they should stop their SIPs or is it worth investing in mutual funds anymore. These are all direct investors who are directionless after the recent market volatility and the buzz around LTCG tax,” says Harpreet Singh, Founder, Vserv Capital Services. He adds that many of these investors are still not getting in touch with mutual fund advisors. “Some investors are still not getting help. This might result in bad investment decisions,” says Singh.
Many direct investors are seen asking questions about whether their investment decisions are in the right schemes on various mutual fund forums. Some investors are also approaching the mutual fund advisors for help, but in some cases, it is too late. “Some investors call us and tell us about the investments they have made. They are worried because of the volatility in the market and are invested in smallcap schemes which were hit the most. Now, we can’t even help them because redemption is not always an option,” says Puneet Oberoi, Founder, Excellent Investment Advisors.
AMFI data shows that the mutual fund industry added about 9.26 lakh SIP accounts each month on an average during the FY 2017-18, with an average SIP size of about Rs 3,300 per SIP account. More new investors started flocking to mutual funds as the markets started running up and touching new highs every week. “These investors were happy with their investment decisions when the market was running up. Every scheme was giving good returns, so they forgot about their risk appetite. After the correction, they have nowhere to go. Now they are making frantic calls to advisors. This should have been the first step,” says Harpreet Singh.
Many investment experts believe that new investors shouldn't invest without consulting an advisor. But many small investors do not see a point in paying the advisors for making a small investment. “Paying for advice is still not a norm in India. When the markets go up, everyone runs after returns and when the market falls, everyone runs after the advisor. If you stick to an expert from the beginning, you will save yourself the cost of unnecessary redemptions, loss of capital and most of all your peace of mind,” says Neeraj Chauhan, CEO, The Financial Mall.
