Mutual Fund Investment: How should you invest now? Anil Singhvi’s strategy and top MF picks explained

The mutual fund industry data for March remained strong despite market volatility, with equity inflows hitting record levels and SIP contributions staying robust, according to Anil Singhvi.

Speaking in a Mutual Fund Masterclass, Singhvi said, “March data is strong. Equity investment in mutual funds is at a record high level.” He highlighted that inflows into equity funds rose sharply to around Rs 44,500 crore in March compared to about Rs 29,000 crore in February, indicating sustained investor confidence despite market correction.

Add Zee Business as a Preferred Source

However, the overall assets under management (AUM) of the mutual fund industry declined to around Rs 73.7 lakh crore from Rs 82 lakh crore in the previous month.

Singhvi explained that this fall was largely due to market correction and heavy outflows from debt funds. “Nearly Rs 2.95 lakh crore was withdrawn from debt funds, which is a typical trend seen in March,” he said.

Hybrid funds also saw outflows of about Rs 16,500 crore, further impacting overall net inflows. Despite this, Singhvi emphasised that the underlying trend remains positive. “Overall investment momentum is strong, especially in equity funds,” he added.

SIP contributions continued to remain at record levels. Monthly SIP inflows crossed Rs 32,000 crore for the first time, compared to around Rs 29,000 crore in February. Singhvi noted, “SIP numbers are very strong. For several months now, monthly SIP inflows have stayed above Rs 29,000 crore.”

At the same time, the SIP stoppage ratio rose sharply to 99 per cent, indicating that nearly as many SIP accounts were closed as opened during the month. “This reflects some impact of market sentiment, where investors may be stopping older SIPs,” Singhvi said.

On equity fund categories, Singhvi pointed out strong inflows across segments. Flexi-cap funds saw a sharp rise in inflows to around Rs 10,000 crore from Rs 6,900 crore in February. Small-cap and mid-cap funds also witnessed increased investments, while large and mid-cap funds saw steady inflows.

“There is no category in equity funds where inflows have declined. Across the board, investments have increased,” he said.

In contrast, arbitrage funds saw significant outflows of around Rs 21,000 crore, largely due to their debt-like nature. Gold ETFs saw reduced inflows for the second consecutive month, while silver ETFs continued to witness outflows.

Passive funds, however, performed well. Index funds and other ETFs attracted strong inflows, driven largely by institutional investors such as EPFO, banks, and PSUs. “Passive funds are gaining traction due to lower cost and ease of investment,” Singhvi said.

On the proposed mutual fund gift card, Singhvi said the initiative could be a “game changer” for financial savings. The proposal, currently under consultation, allows individuals to gift mutual fund investments through prepaid instruments.

He explained that each gift card will have a maximum limit of Rs 10,000 and must be fully invested in one go within a year. “This ensures disciplined investment and prevents misuse of funds,” he said.

On investment strategy in the current volatile market, Singhvi advised investors to avoid trying to time the market perfectly. “Bottom identification is difficult. Instead, investors should adopt a structured approach,” he said.

First, investors can wait for clarity on global events and signs of a market bottom before investing. “This is a safer approach, though returns may be lower as entry happens at higher levels,” he said.

Second, and more effective according to him, is the “short blast SIP” strategy. This involves investing in parts over a short period during market declines. “You can invest over six weeks or six months in multiple tranches,” he said.

He further explained that investors can either invest based on time intervals or market levels. Aggressive investors can invest on every 500-point fall in the Nifty, while conservative investors can invest at wider intervals of 1,000 points.

“This approach helps average out cost and reduces risk in volatile markets,” Singhvi said.

For the “Fund of the Month,” Singhvi recommended flexi-cap funds, citing their diversified nature. “Flexi-cap funds invest across large, mid, and small caps, offering a better balance in the current market,” he said.

He named Parag Parikh Flexi Cap Fund, HDFC Flexi Cap Fund, and Kotak Flexi Cap Fund as key options, with HDFC Flexi Cap Fund as the preferred pick.

On new fund offers (NFOs), Singhvi noted limited options this month but highlighted a few opportunities. Among them are Kotak Multi Asset Omni Fund of Fund, Groww Arbitrage Fund, Axis Nifty India Defence Index Fund, and Zerodha Nifty-based index fund.

“Among these, Axis Nifty India Defence Index Fund looks interesting from a thematic perspective,” he said.

Summing up, Singhvi said the March data reflects strong investor maturity. “Despite market correction and liquidity pressures, investors are continuing to invest. This is a positive sign for the market,” he said.

He reiterated that disciplined investing through SIPs and staggered strategies remains the best approach in uncertain market conditions.