Digital platforms have also seen increased traction. “We have seen lump sum flows increase. Existing investors have increased allocations in systematic investment plans on our platform. While a section of new investors coming from offline to online is limited, there has been pick-up in do-it-yourself investors, who want to track and take quick decisions online,” said Harsh Jain, co-founder, Groww, Bengaluru-based digital platform.
Experts say high net-worth investors could have heavily contributed to redemption requests to book losses in the year-end period for some relief on taxation.
Equity-linked saving schemes (ELSS) — which are used by investors for tax-related savings — saw sizeable flows of Rs 1,075 crore in March, rising 23.4 per cent over the previous month. Experts say ELSS could continue to see decent flows as the government has extended the deadline to complete investments till June 30, from March 31.
However, arbitrage funds could see Rs 25,000 crore to Rs 30,000 crore of net outflows in March. Experts say this can be attributed to futures starting to trade at discount to cash market prices due to higher market volatility.
“This temporary dislocation in the markets
had weighed on the returns of arbitrage schemes,” said an executive of a fund house.
Meanwhile, debt schemes are likely to have seen much higher redemptions, with corporates looking to dip into their investments to deal with payment obligations as daily operations have been disrupted amid lockdown.
Redemption pressures had spiked in debt schemes with close to Rs 1 trillion of investments getting pulled in the week prior to the announcement of the lockdown.
The fear of redemption pressures in debt schemes was compounded due to the anticipation of flows in the quarter-end and year-end period.
This had prompted the MF industry to write to the Reserve Bank of India (RBI) to provide liquidity support. The RBI last week announced Rs 3.74 trillion of liquidity enhancement measures, which entailed banks would also need to absorb the supply pressures coming into the corporate bond market by MFs and non-banking financial companies.
“This move should help fund houses to deal with redemptions. The debt market is now seeing improved liquidity, following the RBI’s intervention,” said a debt fund manager.