Investment advisors riding high as equity cult spreads

Surge of investment opportunities has brought in pool of cliental seeking options of short-term investments through mutual funds and equity. Financial consultancy firms are now adding 200 new clients as against previous count of 70- 100 investors per year

New Delhi: As savings options of fixed deposit and recurring deposit continue to offer lower interest rates, small time investors are shifting rapidly moving and rerouting towards mutual funds (MFs) and equity investments, according to the experts.

With market enjoying favourable momentum, Indian stock market has gained traction more than any other major markets in the world. As per investment consultants across the country, the upward performance continues to bring in new customers and the old ones with a renewed interest in Equity-Linked Savings Scheme (ELSS) scheme for a 'win-win' situation.

Small to medium-sized investment consultancies and services companies have reported a surge in wave of clients with many reporting a 100 per cent increase in customers addition since the beginning of 2021. Sameer Kaila, owner of Dhancreators Financial Services, says that "two years ago, the company on an average would add 70 to 100 investors per year. As of 2021, the company has already added close to 200 new clients to its portfolio." Investment consultants have also noted that those who took their finances during peak periods of Covid-19 pandemic, returned to the risk-based investment options of mutual funds and equity since August this year.

"Earlier this year, there were some investors who took their money out during the months of April and May due to the worrisome situation. But now when the same investors are wanting to return to equity segment, markets spiked to new heights, which has made it difficult for those same investors to enter. So, these investors are waiting on the side-lines for the markets to come down so that they can put their money in," Kaila said.

The investment consultant also highlighted to the fact that those who additionally bought mutual funds during the peak periods of Covid-19 crisis, in March-April 2021, when the markets were comparatively lower, they have got more than 100 per cent return on their investments.

But many have warned that with the surge of investment opportunities has brought in pool of cliental seeking options of short-term investments through mutual funds and equity.

"We get five to seven such calls a day of people who are looking for short term investments. We do not take customers who aren't ready to commit for a minimum of three years. If you are investing into mutual funds, we tell our customers to lock-in their financial investment for a longer period for better returns. Unfortunately, there is a surge of people who are looking for quick money through mutual funds with investment period of six months or one year," he added.

Similarly, Abhinav Kalra, a private investment consultant, says that first time investors, largely between the age of 25 years to 38 years, do not fully understand the risk that comes with mutual funds investment and many think of the process similar to stocks and debentures.

"First time investors do not know exactly what mutual funds are but the buzz and hype around it has attracted so many youngsters. So, to each customer we explain them the entire process, portfolio, Sebi's guidelines and underlying risk involved with their investment plans. This isn't a stock investment. Every client goes through (financial) background screening before getting them onboard," Kalra said.