Are you adding new mutual funds to portfolio amid rising market for better returns? Not a good idea, follow this instead
The voracious appetite among MF investors is evident in the flows pouring into funds. Gross money invested via systematic investment plans (SIPs) surged to an all-time high of Rs.23,547 crore in August. The total number of SIP accounts reached 9.61 crore, while the folio count surpassed 20 crore. The share of equity funds in total AUM now constitutes 62% of the industry’s AUM—an all time high—showing a growing appetite for risk. Individual share in total AUM has grown from 54.9% to 63.2%.
However, investors are not simply putting more money in the existing funds in their baskets. They are adding new funds in a bid to boost their returns. This is a familiar story in every bull market. As fund performance kicks into higher gear and gets entrenched, investors start getting adventurous. They start fishing for bigger opportunities for outsized return. Recent table-toppers are the obvious targets for most. A recent study by ICICIdirect.com shows that investors have been piling on schemes that have topped the charts in the past three years.
Investors are not just chasing past return. Perhaps more alluring than established funds are new fund offers, particularly of the exotic variety. A large portion of the money has been flowing into thematic funds, which are being pushed aggressively by AMCs of late. Some of these funds invest in narrow ideas like defence, electric vehicles and tourism, while others cover broad themes like manufacturing, business cycles and special opportunities. As many as 93 new equity funds have
