Zerodha CEO Nithin Kamath made a curious claim on X platform (formerly Twitter) about the equity investors on his platform having higher notional gains than mutual fund investors. He said this is 'strange' considering direct equity investors are usually expected to do worse than MF investors.
"As strange as it sounds, our equity investors are sitting on higher overall notional gains than equity mutual fund investors. Maybe the popular narrative that retail investors are clueless and “gambling” isn’t fully accurate. That’s because you would expect direct equity investors to do worse than mutual fund investors," said Kamath recently on 'X'.
However, Kamath gave a disclaimer saying most of these investors entered the platform post-2020, "which is one of the biggest bull markets India has seen".
Covid-induced crash in stock markets in March 2020 turned out to be a boon in disguise as capital became cheaper with interest rates kept low to spur consumption during the pandemic. Lot of brokerages saw an influx of investors that weren't seen before, at least in India.
"Disclaimer: Most of our AUM was added post-2020, which is one of the biggest bull markets India has seen," said Kamath.
Many netizens reacted to Kamath's post and they had diverse opinions on the claim made by Kamath.
Some said that these investors will exit if they see a bear market while some others said retail investors have more risk-taking ability unlike fund managers.
"Many of them will exit either when it's at the bottom being hopeless or exit when they start getting their cost of acquisition. I saw it in 2013 when people sold at the cost of what they bought in 2008," said one X user.
"Nice to see India doesn't need any Financial Education, they are already there. They know what to buy, how to construct a portfolio, how to ride the market up and down, and how to exit," said another X user.
"Picking stocks isn’t a skill. Being in that stock for a trend is a test of mindset and some people win it," quipped another X user.
"The skill gap between an informed retail investor and the professional fund manager across most fund houses today is almost non existent. In fact, the scale tilts in the favour of the informed retail investor. The research and access to information is highly democratised in today’s digital age," said another X user.
"Longevity of returns, staying in the game and survival are far more important than heroic returns achieved in any given few years," said a netizen.
Inflows into India’s equity mutual funds fell in November, while investors continued to prefer small- and mid-cap funds on hopes of strong returns, data from the Association of Mutual Funds in India (AMFI) showed on Friday.
The inflows dropped 22.15% month-on-month to Rs 15,536 crore in November from Rs 19,957 crore in October, the data showed.
Mutual fund inflows in equity-oriented schemes were at Rs 1.45 lakh crore, so far this year, propelling the benchmark indexes Nifty 50, BSE Sensex as well as the more domestically focussed small- and mid-caps to fresh all-time highs.
The benchmark Nifty 50 gained 5.52% in November, its best month since July 2022, aided by favourable liquidity conditions, easing global rate concerns and strong macroeconomic data.