SIPs stop, demat accounts slump: Are retail investors running scared?
Subscribe to enjoy similar stories. MUMBAI : If the latest data is any indication, retail investors are experiencing an anxiety attack. While a full-blown panic is contained, for now, the market's shaky ground is causing jitters.
Mom-and-pop investors are showing signs of unease, and experts warn a storm is brewing. With mid- and small-cap stocks poised to fall further, markets could witness a wave of mutual fund redemptions. “Another 5% or more correction in the mid- and small-cap index will trigger redemptions (from equity schemes) in the next couple of months," said Viraj Gandhi, chief executive of Samco Mutual Fund. Gandhi explained that 28-month-old systematic investment plans (SIPs) are currently experiencing negative returns.
This means investors who entered the market in the last couple of years, particularly in the mid- and small-cap segments, are bearing most of the brunt. “Once 36- and 48-month SIPs turn negative, that’s when redemptions will start and a bottom will form. Hence, investor sentiment might be dented right now.
But it is not punctured yet," he added. AMint analysis of the latest Association of Mutual Fund Industry (AMFI) data showed that the redemption to net inflows ratio for equity schemes has remained below 1 since September. This indicates that redemption pressure on mutual funds has remained low until February as most investors are avoiding booking losses, according to experts.
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