Indian Retail Investors Show Strong Preference for Gold ETFs and Midcap Funds
In October 2023, Indian retail investors exhibited a strong preference for gold ETFs and midcap funds as the festive season approached, according to data released by the Association of Mutual Funds of India (AMFI).
Investments in gold ETFs (exchange traded funds) saw a staggering increase of 472% to ₹841 crore in October, up from ₹147 crore in the same period in 2022. This surge in gold ETF investments aligns with the trend of retail investors seeking long-term value creation and embracing themes with potential for higher returns.
Additionally, the data also reflects a clear shift in the investment preferences of retail investors. Despite warnings from experts, retail investors continued to focus on midcap funds in pursuit of better returns, driven by government policies that supported this sector. In fact, small and midcap funds attracted inflows of around ₹4,495 crore in October, showing a substantial increase from the previous month.
G. Pradeepkumar, CEO of Union Mutual Fund, cautioned investors to remain cautious about short-term market volatility and consider a staggered approach to their investments, despite the positive long-term outlook for small and mid-cap stocks.
The data also revealed that financialization of savings has been a significant trend in India since 2016. In October 2023, net inflows into equity-oriented schemes surged by 113% to ₹19,957 crore, indicating a strong faith in the India story among retail investors.
The findings also shed light on the sectoral shift in investments. Retail investors showed a significant preference for automobiles, utilities, consumer, and insurance sectors, with the weight of automobiles reaching a five-year high in October 2023.
The sectoral allocation in funds saw notable changes, with increased weight for automobiles and utilities, while the weightage for private and PSU banks declined. This shift in sectoral allocation reflects the evolving investment preferences of Indian retail investors. Overall, the data points to a growing maturity among Indian retail investors, who are increasingly seeking diversified investment opportunities for higher value creation.
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