It is not just small investors who have played it safe in recent times. India’s super-rich have done it too.
Data from the Association of Mutual Funds of India show high net worth investor interest rising in debt funds and flagging in equity funds.
The number of HNIs (individuals investing Rs 5 lakh and above) in debt mutual funds was higher than the number who put money in equity funds by end-March 2013.
The number of HNI accounts in equity-oriented funds was 3.37 lakh but 4.95 lakh in debt funds.
The total investments by HNIs in debt funds, including gilt and money market funds, stood at Rs 1.50-lakh crore, up 36 per cent from March last year.
Their investment in equity schemes totalled Rs 33,737 crore, a 10 per cent dip from last year.
“Since debt offered attractive returns with high certainty, most investors preferred to stay invested in it.
In the last one year, investors took the advantage of falling interest rates by moving into long dated bonds and mutual funds and made double-digit returns,” says Rajesh Iyer, Head - Investments & Family Office, Kotak Wealth Management.
Retail investors also increased their debt fund holdings in this period, though still lower than equity exposure. The total number of retail folios in debt-oriented funds is 51 lakh against 326 lakh in equity funds.
Love for gold
Today, gold-exchange traded funds have 11,664 HNI folios. This number was 10,639 a year ago. Their total investment in gold ETFs stand at Rs 2,164.9 crore, up 15 per cent in the period.
Feeder funds that invest in overseas markets have also been popular with HNIs; the super-rich hold about 50 per cent (Rs 1,017 crore) of the assets in these schemes.