Equity funds saw inflows of just Rs 6,609 crore in September, the lowest in the last four months, while money moved out of debt schemes causing the mutual fund industry to report outflows of Rs 1.51 lakh crore.
Open-ended debt schemes saw large outflows to the tune of Rs 1.58 lakh crore, largely due to the redemptions from liquid funds. Data from the Association of Mutual Funds in India (Amfi) showed liquid funds saw outflows of Rs 1.40 lakh crore.
Moreover, ultra-short duration funds and money market funds also saw outflows of Rs 6,783.41 crore and Rs 6,278.07 crore, respectively.
Market participants say that outflows from liquid funds were triggered by institutional investors redeeming their investments to pay advance tax.
Jimmy Patel, MD and CEO, Quantum Asset Management Company, said: “This is a typical quarter phenomena in liquid funds as corporates and banks redeem the money for their advance tax payment. Also, new announcements made by the regulator on liquid and money market schemes had some impact on inflows last month.”
Capital markets regulator Sebi had announced that liquid funds shall hold at least 20% of its net assets in ‘liquid assets’, which include cash, government securities, T-bills and Repo on government securities. Currently, liquid funds invest in several money market instruments like commercial papers, commercial bills, treasury bills and certificate of deposits, among others, but there are no cap on investments. Market participants say that this move will bring down returns of liquid funds going forward and make them unattractive.
MFs will now also levy exit load on investors who exit the liquid funds within seven days of their investments.
In the past, there have been redemptions from liquid funds at the end of every quarter. In June this year, outflows were Rs 1.52 lakh crore, while in March 2019 it was lower at Rs 51,343 crore. The data from Amfi show that in December 2018 outflows from liquid funds were Rs 1.48 lakh crore, and in September last year it was Rs 2.11 lakh crore.
In equity-oriented schemes, inflows remained strong across all categories, barring dividend yield funds and thematic funds, which saw outflows of Rs 13.11 crore and Rs 148.14 crore, respectively. While large-cap and multi-cap saw inflows of Rs 1,559.53 crore and Rs 1,674.57 crore, respectively, in September. Small cap funds also saw inflows of Rs 895.75 crore.
NS Venkatesh, CEO, Amfi, said: “We have seen positive growth in the mutual fund market from the retail investors. The regulator has done a phenomenal job in mitigating the risks in the debt market investments. For equity funds, we see the growth is mirroring the markets. The new SIP account openings are showing the robust growth. SIP is here to stay and when the broader markets show performance we see SIP outperforming.”
In September, total amount collected through SIPs was Rs 8,262.94 crore. In the six months of the current financial year, SIP contribution was around Rs 49,361 crore, show the data from Association of Mutual Funds in India.
The AUM as of September for the MF industry stood at Rs 24.5 lakh crore against Rs 25.47 lakh crore in August, a fall of 3.8%, show data from Amfi.
