Equity MF continues to see outflow; investors withdraw Rs 734 cr in September

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Updated: Oct 08, 2020 6:01 PM

Credit risk funds saw an outflow of Rs 539 crore in the period under review, which was lower than Rs 554 crore in August, Rs 670 crore in July, Rs 1,494 crore in June, Rs 5,173 crore in May and Rs 19,239 crore in April.

Equity MFs saw their first outflow in over four years in July on profit-booking.Equity MFs saw their first outflow in over four years in July on profit-booking.

Equity mutual funds witnessed an outflow of Rs 734 crore in September, making it the third consecutive monthly withdrawal, primarily on pull out from multi-cap space.

The industry body Amfi CEO NS Venkatesh expects positive inflow in equity schemes from October-November.

Apart from equity, investors pulled out over Rs51,900 crore from debt mutual funds (MFs) last month compared to Rs 3,907 crore in August, data from the Association of Mutual Funds in India showed on Thursday.

Overall, the mutual fund industry witnessed a net outflow of a little over Rs 52,000 crore across all segments during the period under review as against Rs 14,553 crore in August.

This outflow could be attributed to withdrawals from liquid, equity and hybrid schemes.

As per the data, outflow from equity and equity-linked open ended schemes was at Rs 734.40 crore in September, sharply lower than Rs 4,000 crore outflow seen in August.

The equity schemes had witnessed an outflow of Rs 2,480 crore in July, which was their first withdrawal in over four years. Prior to this, such schemes had attracted Rs 240.55 crore in June.

“The number of folios as well as funds mobilised during the month was higher than August, and the redemption amount too came down. This indicates that while there are investors who chose to book profit given the surge in the equity markets across segments in the recent times, there are set of investors who have started to invest in the markets as well.

“The markets also corrected mid-month which would have also given a good investment opportunity for investors,”said Himanshu Srivastava, Associate Director Manager Research at Morningstar India.

G Pradeepkumar CEO Union AMC also said it appears that interest in equity mutual fund schemes is seeing a good revival.”Mobilisation into open ended equity schemes in September has been the highest in the current financial year.The number of folios in the industry as a whole and specifically in equity funds has also gone up significantly,” he added.

In the equity segment, multi-cap was the worst hit with an outflow of Rs 1,114 crore in September followed by large-cap ( Rs 576 crore), value fund (Rs 489crore) and mid-cap (Rs 68 crore).

On the other hand, focused fund and large & mid cap segment saw robust inflows during the month.

Gopal Kavalireddi, head of Research at Fyers said the latest Sebi’s circular on asset allocation of multi-cap funds seemed to have an effect on this segment.

“The assets continued to move out of multi-cap category, which was the worst hit during the month. While the category has been witnessing net outflows since June, Sebi’s recent guideline around the investment mandate for the category could have also contributed towards the net outflow this month,” Srivastava said.

With a net inflow of Rs 823 crore, focused fund category was the biggest beneficiary during the month, followed by large and mid-cap fund with a net inflow of Rs 621 crore.

“Both the categories have seen launch of new funds which garnered good traction from investors. Additionally, uncertainty around the multi-cap category would have prompted investors to focus on categories such as large & mid cap instead,” Srivastava said.

Gautam Kalia, Head Investment Solutions, Sharekhan by BNP Paribas said,the 7 per cent fall in the markets in the third week of September would have led to reactionary redemptions from some mutual fund investors.

Among fixed-income securities, liquid schemes saw a pull-out of Rs 65,952 crore, ultra short duration funds (Rs 4,867 crore) and money market (Rs 4,857 crore).

Credit risk funds saw an outflow of Rs 539 crore in the period under review, which was lower than Rs 554 crore in August, Rs 670 crore in July, Rs 1,494 crore in June, Rs 5,173 crore in May and Rs 19,239 crore in April.

However, the banking and PSU category continued to buck the trend and grow with over Rs 6,400 crore in positive net flows.

According to Pradeep kumar, there appears to be preference for schemes with good credit quality which can offer reasonable returns banking and PSU fund, medium duration fund, corporate Bond fund among others.

Besides, investors are opting for safe haven assets with gold exchange traded funds (ETFs) witnessing an inflow of Rs 597 crore.

The assets under management of mutual fund industry dropped to Rs 26.86 lakh crore at September-end from Rs 27.5 lakh crore at August-end.

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