Equity Investments To Remain Muted In 2019, Says Mutual Fund Trade Body AMFI

Investment flows into equity and equity-linked schemes will see a marginal slowdown next year following the introduction of long-term capital gains tax but systematic investment plans will remain in favour.

“It's just been 1.5 months since the introduction of LTCG and next year we will see a marginal slowdown in terms of overall inflows, but SIPs will remain the way of investing in mutual funds,” A Balasubramanian, chairman of Association of Mutual Funds in India told BloombergQuint on the sidelines of a press conference today.

Equity inflows into mutual funds, as per the data provided by AMFI, rose nearly 152 percent to Rs 16,268 crore as of February 2018, compared to the same period last year. Of this, nearly 40 percent was SIPs, which require investors to commit a fixed amount of money every month.

The government reintroduced a 10 percent LTCG tax on equity-oriented schemes in this year's Budget, which became effective on April 1. This, according to Balasubramanian, will direct higher inflows towards fixed income instruments. “As long as the return differential between equity and fixed income stays narrow, you will also see more money coming into fixed income,” he said.

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