With a less-than-promising 2011 behind, mutual fund houses can look forward to a better 2012, says a report from credit-rating agency ICRA.
The report on the mutual fund industry says that with the equity markets on an upswing in 2012, interest among investors may come back. “The funds can also benefit from gradual improvement in confidence due to policy actions aimed to mitigate concerns emerging out of the Euro Zone debt crisis.
“Expected easing of monetary policy in other emerging markets is also expected to add to the positive sentiments,” said the report. The BSE Sensex has so far, this calendar year, risen 13.6 per cent. Calendar 2011 witnessed a 24 per cent fall. .
Wealth management firms may now focus on mutual fund to retain their customer base in the wake of the increase in minimum investment amount for PMS.
At a January 28 board meeting, capital market regulator SEBI hiked the minimum investment amount for PMS funds from Rs 5 lakh to Rs 25 lakh. . Analysts say that this may help the mutual fund industry which had lost a number of its high-end investors to the PMS business post the entry-load ban. This was because distributors could charge a high entry fee for PMS products but not for mutual fund products.
Debt funds could also see continued interest in the short-term, which will result in better risk-adjusted returns. The tight Government fiscals could, however, limit the upside over the short-term. Also, FMPs may see sustained interest among investors, as the “recent ruling of reducing the marked to market window from 90 days to 60 days and that all securities in the liquid schemes be valued could ensure that investors with a longer term investment horizon stand to benefit,” said the report.
Gold ETFs may not
Investors of gold ETFs may have less to look forward to as there is less likelihood of 2012 being a repeat of 2011 in terms of the returns provided.
“We could also see a realignment of investor interest due to the increasing feeling of comfort which could be generated by lower inflation numbers. Anticipation of positive policy action especially on the monetary front could increase the attractiveness of other asset classes.
“Another possible reason for a slight cooling down is the fact that upside gained from gold could increasingly be looked at as collateral to cover for downsides in other asset classes,” said the report.
Gold ETFs were among the best performing category of calendar year 2011 due to steady rise in gold prices.