Wealth Forum Advisor Confidence Survey 2017
Part II :Market & Product Confidence
Hybrids overtake debt funds in advisor confidence


The results of the 6th annual Wealth Forum Advisor Confidence Survey are now in. We are covering the highlights of this exhaustive survey in a 3 part article series, with this article covering the Market & Product Confidence sections. You can access the entire report here. The verdict: equity bull market will continue, unhindered by any surprises in interest rates or currency movements. Hybrid funds have clearly become mainstream, with confidence levels in them outstripping debt funds for the first time in the 6 year history of this survey.

Market Confidence: highlights

  1. Clearly bullish outlook on equity market - average Sensex forecast for Mar 18 pegged at 33,185. Only 7% of advisors expect markets to go below current levels, 25% expect the same range (30,000 - 32,500) and as much as 67% expect markets to break into the next level or beyond by Mar 18.

  2. Interest rates to remain in the current range - average 10 yr G-Sec yield forecast pegged at 6.47% by Mar 18.

  3. Stable outlook on INR/USD - forecast for Mar 18 pegged at 63.77. 29% of IFAs however expect gentle depreciation into the 65-70 rupee band by Mar 18.

Neutral outlook on interest rates and currency mean no surprises expected that can destabilize the equity bull market.

Product Confidence: highlights

  1. Confidence in recommending equity SIPs continues to be very high (9.4), unlike equity STPs, where confidence has begun flagging a bit (down from 8.4 in 2015 to 8.2 in 2016 to 7.6 in 2017). Could STPs in dynamic asset allocation funds be gaining traction now, as markets scale new highs and valuations appear stretched?

  2. Within equity funds, advisor preference is clearly shifting from "go anywhere" (diversified equity funds with no market cap bias) to "go everywhere" (multi cap funds which straddle all cap segments), even as mid and small cap funds shrink further in advisor preference.

  3. Confidence in debt funds remains range bound (7.4 in 2017 vs 7.6 in 2016 vs 7.5 in 2015), contrary to expectations of a big jump post demonetization, when the fund industry has been strongly pitching debt funds as an ideal vehicle for idle balances piling up in savings accounts.

  4. Confidence in dynamic bond funds registers a steep fall (25% in 2017 vs 43% in 2016) even as accrual funds continue to retain their confidence levels among advisors. This, read with the interest rate outlook suggests that accrual is going to be the only game in town for debt funds.

  5. Hybrid funds have, for the first time, overtaken debt funds in advisor confidence levels (hybrids 7.6 vs debt funds 7.4). In addition to balanced funds, newer age categories like dynamic asset allocation funds and equity savings funds have clearly caught advisor attention.

Wealth Forum Advisor Confidence Survey 2017: click here to read the full report

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