3,50,000 3,00,000 2,50,000 2,00,000 1,50,000 1,00,000 50,000 0 -50,000 -1,00,000 Total net inflow (` cr) FY07 FY09 FY11 FY13 FY15 FY17 FY06 FY08 FY10 FY12 FY14 FY16

NET INFLOWS IN INCOME SCHEMES ROSE MORE THAN SEVENFOLD TO ₹1.2 L CR, WHILE

THAT IN LIQUID FUNDS GREW MORE THAN FOUR TIMES TO ₹95,826 CR

vendra Nath, managing director of Ladderup Wealth Management Pvt Ltd. He pointed out that in the last three to four years, average returns from corporate debt is in the range of 9-9.5%.

Nath added that currently, bank fixed deposits return 3.5-4%, which is below inflation rates.

Vidya Bala, head of mutual fund research at Fundsindia.com, agreed.

“For the liquid schemes, it is largely the institutional flows. It is mainly meant for parking institutional money,” said Bala.

“People have flocked to income funds after the drop in fixed deposit (FD) rates. A number of investors have switched to debt funds from FDs, and that trend will continue for a while,” said Bala, adding many of these were first-time mutual fund investors who prefer this option to traditional bank fixed deposits. “The more conservative investors would prefer income funds to equity oriented funds.”

Net inflows into equity schemes in 2016-17 dropped 4.94% to ₹70,367 crore from a year before. However, interest in equity funds is growing, say asset managers, pointing to the near-92% rise in inflows into them since 2005-06.

“Investors are aware that Indian economy is on a strong footing. Relative attractiveness of equities as an asset class has increased as other alternatives cease to be as attractive as before,” said Agrawal of Tata Asset Management, pointing to the decline in the rates of bank deposits.

“The long-term outlook on the economy and the markets looks positive,” added Agrawal.

Nath of Ladderup said the outlook for equity inflows was positive and he expects a deluge of inflows into the asset class over time.