It’s kind of an anomaly. Or I don’t know if it is an anomaly, but what triggered the July data?
Feroz Aziz: If you look at the inflow data, it is a record high and the net inflow is quite low. Why am I calling it a record high? If the SIP numbers jumped from 21,260 to 23,332 in a month, that means a jump of 2,000 crores in SIP inflows in a month. Sanjay bhai is there. He has been collecting SIPs and abhiyan chala rahe hain. It can’t just be retailers increasing their SIPs by 22,000 crores.
HNIs are also using SIP as a route. This is one of the obvious inferences. NJ and Prudent are the biggest SIP earners in the country. And it wouldn’t be surprising if NJ’s SIP is 1,500, 1,800 crores in 30 years. And in a month, SIP went up by 2,000 crores. So one inference is that HNIs are using SIP as an entry route because of the level at the first point.
Second point is I think AMC is slightly misreporting the numbers and that is why they have no way of distinguishing between SIP folios and lump sum folios.But do you register for SIP? Don’t register for lump sum.
Feroz Aziz: Okay, let me give you some examples. My driver, my driver does a SIP of 4,000. He does 2,000. I add 2,000. He has accumulated 4.5 lakhs in HDFC Flexi Cap for the last 6 years. Now, wouldn’t he be worried about the fact that 30-40% of his life savings are in one plan? He repays it and continues with the SIP of 4,000 and repays this from the SIP portfolio and divides the lump sum portfolio into six plans. Would you call this repayment from SIP?
Technically, no. Obviously not.
Feroz Aziz: But it is classified as a redemption. Bhai, kisi ki agar lifetime saving scheme mein chali jaayegi, accumulate karte hua, then it is logical that he is worried about one scheme. Now, he is also looking at mutual fund sahi hai but ek hi nahi sahi ho sakta 600 mein se. He will redeem it and put it somewhere else. That is, it is called a lump sum but it is only his SIP accumulation.
It’s just money being recycled.
Feroz Aziz: Again, on the contrary, I did the exact opposite. I ran a SIP. I got a lump sum. I bought it in a SIP portfolio. Now you are counting it as a SIP inflow because you marked it as a SIP portfolio. But it is not a SIP in terms of net income.
So, if there is no indication, why do you separate the folios into SIP folios and non-SIP folios? I have the right to buy SIPs in the same folios.
I have the right to buy a lump sum from the same portfolio. What you should look at is that the net short of stock mutual funds is 37,082. That is a reasonable number.
The reality is that mutual funds are losing HNI money to complex products. That is the reality. You may want to close your eyes when the cat drinks milk. HNIs are moving their money to PMS despite the higher risk, higher concentration, higher taxes, and higher fees. I think the last one illustrates my point well.
So, the point is that there is a huge factor in the market, which is the basis of the market, every month 20-22 trillion crores of new money is flowing in through retail investors. As we are discussing the data and there are many opinions floating around now, this is gross and this is net. According to you, what is the realistic inflow in the stock market every month?
Feroz Aziz: So if you divide it into three platforms, SIP, non-SIP is mutual fund platform. Then there is AIF, long only AIF and PMS. If you look at mutual funds, the estimate for lump sum mein aaya is given as lump sum, SIP, net is important. I think this is something that the industry needs to look at. It has been averaging around 15,000-17,000 crores in the last one year and next year, lump sum and SIP combined net is likely to be 20,000 crores.
Fresh capital inflows, including NFOs, lump sums and SIPs, are reaching 1.5 trillion to 8 trillion crores per month.
Feroz Aziz: Only through mutual funds.
Okay, through mutual funds, let’s move on to another category.
Feroz Aziz: AIF is very easy to display because it uses a pool account. PMS is very difficult. If we open a PMS and Nikunj Sahib in the same PMS, we will still be trading in our own Demat account and it will not be very easy to decipher.
So, when you look at the HNI money flowing through these two platforms, it seems like the amount flowing through them is the same, but it is not strictly measured in numbers.
And if we have to do a rough calculation of what AIFs we can match, where is that number? And what is your understanding of PMS? You must have done some indirect work, there must be some market estimates floating around. So the net return, mutual funds, is around 15,000-18,000 crores, and if you add AIFs and other PMS, what do you think the number is?
Feroz Aziz: So here’s one way to calculate the net flow for each PMS. We look at the market valuation, but the net flow is the AUM growth that is not explained by the market valuation. We did an estimate. We did an estimate for May, sorry, it hasn’t been updated. It was around 9,000 crores. Since PMS is independent, for example, if PMS grew by 10% in the month or 3% in the month but AUM grew by 6%, the remaining 3% is the net flow. We got 8,000 crores by doing the reverse.
We expect to see net inflows of around Rs 3-35 crore per month from retail, DII or HNI investors in India.
Feroz Aziz: Since you’ve gone into detail, I wouldn’t be surprised if those numbers are as accurate as possible.
