Mutual fund buy-sell ratio rides below long-term average in November, indicating caution among investors | Jobs Vox

Sales of total equity mutual funds fell to 1.09 compared to a long-term average of 1.59. The ratio, which reflects investors’ confidence in market momentum, contracted for a third consecutive month amid a cautious approach amid high valuations and growing concerns over near-term growth prospects. The ratio was less than one to five among 11 equity plans.

Total sales of equity mutual funds in November 2022 were at a 14-month high of Rs 26,029 crore.

Large-cap funds, one of the largest categories of equity funds and often considered a hedge against uncertain times, reported a buy-to-sell ratio of 0.75 in November. It was the fourth consecutive month that the ratio was below 1.1. In flexi-cap funds, the ratio was a 21-month low of 0.8. The two fund categories together account for one-third of the total assets under management (AUM) of equity funds worth Rs 15.5 lakh crore. On the other hand, the ratio of mid-cap to small-cap fund category was higher at 1.5.

Additionally, the pace in folio additions on the equity side is narrowing. Equity mutual funds added 6.1 lakh folios in November 2022 compared to the two-year average of 12.2 lakh. Folio count for large-cap funds fell by 26,000 in November. In September, there were 13.8 million accounts in the mutual fund industry, of which 91.1% were retail investors.