The youngsters today are smarter than the previous generations. They earn more, spend more and at the same time wish to invest for the rainy and uncertain periods in their life- like the one we witness today thanks to Covid ’19. When they invest they expect a good return of say 10-15 % p.a and the most intriguing point is that they are restless and sans patience. They want the returns to be good and quick like the Fast food in their canteen ! When we were talking to some of this genre recently they were keen to invest directly into shares by plunging into the stock markets and the reason they quoted of course, was genuine viz that the MFs in the recent past have not been yielding as much as expected or informally announced based on the past performance of the Fund Houses. The Covid ‘ 19 lockdown has provided a lot of time to these youngsters to dive into the Stock markets directly.
Mutual Fund houses partially attribute the fall in inflow to the fact that physical sales have totally stopped due to the pandemic. Multicap funds, a fairly popular category, have given 5 percent return over 5 years and 9 percent over 10 years, annually.
Investors’ interest in direct stock trading has gone up substantially in recent months particularly amongst the youngsters of this day. They see the numbers of ROI through MFs and complain that the nos. don’t look pretty. In fact the net inflows into equity mutual funds have fallen to a record low of just Rs 225 crore in the month of June, a staggering 96 percent drop from May. Largecap and multicap categories have actually recorded net outflows and even the mighty systematic investment plan (SIP) number has fallen to sub Rs 8,000 crore after many months.
While it is true that the youngsters of this day are equipped with a lot of information, data and technology in their finger tips tend to do trading or investments without MF route. As we always advocate that MF investments are to be in the medium and long term perspective and not on day to day evaluation. The youngsters who have the requisite knowledge and wherewithal might be tempted to plunge into the stock markets but the market operations are quite complex. Unless they understand and assimilate the techniques and use all the available tools effectively, it would prove to be disastrous and depressing. So in view of this the best alternative will be to entrust the task of value investing and money-multiplying to the professional Financial wizards. The present day performance of MFs is due to the fact that the markets are hit by an unprecedented and unexpected virus disaster and this cannot be long and MFs will prove to be the credible investing channel!
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