Mutual funds, for the first time this fiscal year, witnessed net outflows from both open and close-ended schemes, taking the net outflow to Rs 14,533 crore in the month of August, data from the Association of Mutual Funds in India (AMFI) showed.
Mutual funds, for the first time this fiscal year, witnessed net outflows from both open and close-ended schemes, taking the net outflow to Rs 14,533 crore in the month of August, data from the Association of Mutual Funds in India (AMFI) showed. In the previous month, mutual funds recorded net inflows of Rs 89,812 crore. August was also the month when investors pulled out Rs 3,999 crore from equity oriented schemes, considerably more than the Rs 2,480 crore that were pulled out from such schemes in the previous month. Despite this, data showed that average Asset Under Management (AUM) for the month of August climbed 2% to Rs 27.78 lakh crore.
In debt oriented schemes, outflows were seen in overnight funds where investors pulled out Rs 10,298 crore and Liquid funds saw Rs 15,814 crore in outflows. Both these funds had seen net inflows in the previous month. AMFI Chief Executive N S Venkatesh said that the outflows in these two funds could have stemmed from the urgency for money at the end of the month by corporates. Credit Risk Funds and Gilt Funds saw net outflows. “I do not see it (outflows) as a long term trend. Once we see clarity emerging we would again start seeing inflows in the asset management industry given financialization of assets,” said Santosh Kumar Singh, Head of Research, Motilal Oswal Asset Management Company.
Debt oriented schemes that saw net inflows in the previous month were Ultra Short Duration Fund, Low Duration Fund, Medium duration fund, Dynamic Bond Fund, and Corporate Bond Fund, Banking & PSU funds, to name a few. The net asset under management for debt schemes stood at Rs 12.60 lakh crore down from Rs 12.63 lakh crore in the previous month.
Among Equity funds, outflows were recorded in Multi-cap funds, Large cap funds, midcap funds, and contra funds. Total outflows from equity funds stood at Rs 3,999 crore, which is significantly more than Rs 2,480 crore of outflows recorded last month. Industry experts say that the need for cash amidst a pandemic and the run-up in stock markets prompting profit booking could be the reason behind outflows. N S Venkatesh said that the situation is likely to continue for a few more months and expects flows to turn positive by the year end. Contribution from Systematic Investment Plan (SIP) was down to Rs 7,792.63 crore from Rs 7,831 crore recorded in the previous month. “It appears that some investors have taken a tactical asset allocation call by moving from equity to low duration or ultra short term funds with the objective of re-entering equity funds at lower levels in the event of a correction in the markets,” said G Pradeepkumar CEO Union AMC. 7.58 lakh SIP accounts matured during the month of August.