Retail participation in mutual funds still below global average, says G Pradeepkumar of Union AMC

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MintGenie, he also shares the sectors that are likely to do well in the near future. He also highlighted that greater participation of retail investors in mutual funds is a positive trend, although there is still a long way to go with mutual fund penetration hovering around five percent only. The sectors that are likely to do well include hospitals, branded pharma, and power sector.

Our view is that the listed companies would generate healthy returns. Another sector we are positive on is real estate where we are undergoing a multi-year upward cycle. Additionally, the telecom sector is also expected to do well.

Large cap stocks are not cheap, but they are not in the bubble zone. They are expensive. There are domestic investors who have been participating big time.

There is a significant amount of institutional money flowing into large caps. Structurally, there is a change and foreign inflows are likely to pick up. Overseas investors would put a good chunk into large caps.

Liquidity is in favour of large caps. So, moving forward, earnings growth will pick up, interest rates are expected to come down when inflation comes under control. It is a positive trend, but in our view — we are just scratching the surface.

Penetration of mutual funds is just five per cent and the other ratios such as mutual funds-to-GDP and mutual funds-to-FD are still below the global averages. There is a lot of headroom to grow further in the next few years. Investors have realised that investing in equity is good for long-term wealth creation, and SIPs (systematic investment plans) are a good tool for this.