Another reason for the flow into the equity segment is a less promising outlook in the other traditional venues of investment, including real estate and gold.
Milind Barve, managing director of HDFC MF, who has long been advocating equity as an asset class, said: “There is no reason why there will be no rise in inflows in equity inflows. For the long term, equity looks the best asset class.”
The year 2015-16 turned out to be a consecutive year of very strong flows. Put together, nearly Rs 1.45 lakh crore of investors' money found its way into equity MFs over the past two financial years.
Worryingly, flows have been moderating over the past few months. In fact, in March, equity schemes registered outflow of Rs 1,300 crore. Those in the sector, however, don’t see this as an alarming signal. According to them, investors' faith in equity looks restored over recent years.
Currently, funds offer 473 equity related schemes (diversified and equity-linked savings scheme funds) to investors, managing assets worth Rs 3.86 lakh crore.