Money Wise: Tactical Investments Take A Backseat; SIPs Hold Steady
For regular market watchers, the 0.8% fall in the benchmark may even have come as a bit of a relief after four sessions of listless, low-volume trade.
One of the hazards of reporting on equity markets on an ongoing basis is the tendency to focus on each session as it passes. For the long-term investor, of course, it is always a good idea to zoom out and look farther into the horizon than just next week or the end of the month. But, there are still interesting titbits to pick up on a weekly basis.
One such is the drop in equities on Friday. For regular market watchers, the 0.8% fall in the benchmark may even have come as a bit of a relief after four sessions of listless, low-volume trade. If the first four sessions of the market were to be compared to ancient wind-powered ships, then it could be called the ‘doldrums’. This was a phenomenon experienced by seafaring crews on ships, whose sails needed to catch the wind. For days and sometimes weeks at a stretch, ships would be stranded because of a complete and utter lack of wind. To be sure, periods of consolidation are not uncommon, but in recent times, the more popular occurrence has been frenetic movement on either side. After all, just this year, the broader markets have fallen over 20% and regained that amount.
I found the data released by the Association of Mutual Funds in India for the month of June quite interesting. The headline, of course, is that gross inflows through systematic investment plans hit a fresh record of over Rs 27,000 crore, eclipsing the record set just a month prior. Inflows into actively managed schemes climbed because redemptions cooled. This is understandable. In May, with Operation Sindoor and the elevated geopolitical tension it brought, many investors chose safety. What I found interesting though, was the flows into sectoral and thematic schemes. If it was not for inflows of Rs 667 crore via two new fund offers in the category, there would have been a net outflow. Indeed, there were redemptions worth Rs 9,158 crore in this category, which by the way now has 217 schemes.
This tells me that investors are finding that some sectors may be witnessing overheating. For example, the Nifty Defence index has climbed 35.8% over just the last three months. What’s more, fresh deployment is not being made in a tactical manner. Rather, there has once again been a rise in the number of SIP folios – and one would hope the net inflow through this route. The AMFI does not share this number.
The other interesting update was the rise in inflows into gold exchange traded funds to a five-month high. This, too, is understandable. Uncertainty is persisting amidst the Trump tariff saga and with the dollar declining, expectations are for a rise in gold. Not that this is a given. Advisors continue to suggest that investors include gold in their portfolio in moderation and preferably in the form of ETFs. It is good to see more investors buying into this idea.
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This week I also had a great conversation with Priti Rathi Gupta, the founder of LXME – a firm that offers financial planning services for women. We spoke about the encouraging signs of more participation by women in the investing landscape. Women now hold 33% of individual investors’ assets under management in mutual funds – a great sign. And while 19% of demat accounts are owned by women, there are some doubts whether they are all operated by women.
At the core of the conversation, though, was the need for women to take control of their own finances – even if it means starting small.
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