Liquid funds record Rs 2.11 lakh crore outflows in September

By: | Published: November 1, 2018 1:07 AM

Liquid and money market schemes witnessed outflows of `2.11 lakh crore in September as banks and corporates redeemed their money due to the advance tax payment and liquidity crunch in the market.

However, industry experts expect most of the money that flowed out of these schemes would come back in October.

Liquid and money market schemes witnessed outflows of `2.11 lakh crore in September as banks and corporates redeemed their money due to the advance tax payment and liquidity crunch in the market.

However, industry experts expect most of the money that flowed out of these schemes would come back in October.
Officials in the MF industry say only 60-70% of the redeemed money have entered liquid and money market schemes as several corporates stayed away from liquid schemes. Senior officials in the industry also added that even in the equity funds, inflows have slowed down to Rs 7,000-9,000 cr in October. “There were expectations that most of the Rs 2.11-lakh-crore, which was redeemed from liquid and money market schemes, would come back in October. But due to the liquidity crunch, the mutual fund industry has seen inflows of only Rs 1.2-1.4 lakh crore in October. Several corporates have instead invested in bank fixed deposits,” said CEO of a fund house. He added that after a default crisis hit IL&FS, fund mangers are very careful in rolling-over CPs on fear of default in payment.

While companies due withdraw money from MFs in September to pay advance taxes, the relatively tight liquidity in money markets has hurt investor sentiment. Liquid funds invest in debt and money market securities with maturity of up to 91 days only. While money market invests in instruments having maturity up to one year. In the current fiscal, liquid and money market schemes have seen inflows of `50,783 cr, with August and April witnessing inflow of  Rs 1.71 lakh crore and 1.16 lakh cr, respectively, show Amfi data. Even June had seen inflows of `52,104 cr in liquid and money market schemes, while outflows seen in July and May were Rs 31,141 cr and 46,724 cr, respectively.

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