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A good indicator of investor sentiments?
Jan 4, 2014

Equity participation in mutual funds is a good way to gauge the sentiments of retail investors. Whenever the markets go through gravity defying phases, investors lined up to cash in on the rise. Today's chart of the day focuses on the new funds launched by mutual funds and the funds they mobilised through the same over the years. As you can see, the amount of money raised in the pre-2008 phases was way more then what has been the trend in the past five years. In fact, the total funds mobilised through these schemes in the last five years did not even add up to the amount of funds that were raised in the year 2008. In 2007, Rs 293 bn were mobilised by mutual funds. The total sum raised from 2008 till 2013 (till November 2013) stood at Rs 330 bn. As such, it does give a good indication of the kind of euphoria what was surrounding the markets at the time. Not to mention the mutual funds themselves cashing in on the same by launching newer schemes. One would do well to remember the themed funds were quite the around that period.

As reported in the Financial Times, the volatile markets (which keep the investors jittery) in addition to the SEBI's assertion to merge schemes as well as the clampdown on the undifferentiated schemes launched by the asset management companies have been key reasons for the lesser number of schemes launched in recent years.

For investors investing in mutual funds, we have only one simple suggestion. That of following the practice of low P/E investing from a long term perspective!

Data Source: Financial Express; * till November 2013

This Chart Of The Day was published in The 5 Minute WrapUp - Will FIIs continue to remain angels for Indian markets?

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