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A deep dive into 5 current tendencies in mutual funds


The mutual fund trade’s belongings beneath administration (AUM) continued their upward trajectory and elevated 1.6% in October to 37.3 trillion in contrast with 36.7 trillion in September. Additional, the trade’s AUM has surged by 20% for the reason that begin of the calendar 12 months led by equities.  In its current report, ICICI Securities has highlighted sure tendencies within the mutual fund trade. Let’s check out them. 

Fairness funds: In keeping with the brokerage, small-cap funds staged a comeback after a short interval of underperformance.  “Whereas we stay constructive on mid-cap and small-cap funds, multi-cap and flexi-cap funds are higher positioned for many buyers within the present setting the place mid-cap and small-cap funds have already outperformed considerably,” mentioned Sachin Jain, analysis analyst, ICICI Securities.  The report mentioned that sectors equivalent to infrastructure, public sector undertakings, which lagged behind within the early a part of the rally, have began to regain traction. 

New fund presents: In keeping with the report, new fund presents (NFOs) in equity-oriented funds raised greater than 30,000 crore throughout Could-September. Furthermore, inflows into fairness funds previously few months have been dominated by NFOs. 

Trade-traded funds (ETFs): As per ICICI Securities, AUM for ETFs has grown from 5,400 crore in December 2014 to greater than 3.5 trillion at the moment. Whereas progress in ETFs is pushed by institutional flows led by EPFO in Nifty 50 and BSE Sensex ETF together with CPSE ETFs, inflows from particular person buyers have additionally began gaining traction. “This development of allocation in direction of ETF is rising and is prone to achieve additional traction. The ETF market is predicted to develop on the again of continued thrust from authorities and rising acceptance of merchandise equivalent to an funding automobile by the retail section,” mentioned Jain. 

Bond market: ICICI Securities believes that the bond market continues to be in a wait and watch mode with few home MF managers elevating money ranges of their actively managed debt funds.  The yield of AAA-rated corporates has fallen considerably. “With the gross YTM of company bond funds round 5.5%, the attractiveness reduces considerably,” it added. 

Hybrid funds: The hybrid funds class is dominated by aggressive hybrid funds (erstwhile balanced funds) and balanced benefit or dynamic asset allocation funds.

The balanced benefit funds class has been witnessing constant inflows previously six months as many buyers desire to spend money on a dynamically managed fairness funds. 

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