Equity MFs see net outflow for 8th straight month in Feb

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March 10, 2021 3:45 AM

According to market experts, investors have continued to book profits after markets touched multiple all-time highs in February. Re-allocation of funds to alternative avenues such as direct equity or real estate also contributed to outflows in equity schemes. Close-ended equity schemes saw an outgo of Rs 2,354.35 crore, which was largely because many close-ended schemes matured in the February.

MutualFundsA large part of your equity exposure should be allocated to pure large-cap funds, and the rest to mid-cap and small-cap funds.

Open-ended equity schemes continued to witness net outflows for the 8th straight month in February. According to the latest data from the Association of Mutual Funds in India (Amfi), net outflows from open-ended equity schemes were at Rs 4,534.36 crore. Outflows from equity oriented mutual fund schemes were lower than the previous month, which saw outflows of Rs 9,253.22 crore.

According to market experts, investors have continued to book profits after markets touched multiple all-time highs in February. Re-allocation of funds to alternative avenues such as direct equity or real estate also contributed to outflows in equity schemes. Close-ended equity schemes saw an outgo of Rs 2,354.35 crore, which was largely because many close-ended schemes matured in the February.

Akhil Chaturvedi, head of sales and distribution, Motilal Oswal AMC, said, “The trend is similar to January 2021, pure equity net negative outflow of Rs 4,534.36 crore is led by profit booking or get re-allocation to alternate investment avenues like real estate, direct equity or IPO’s.”

The flexicap category of mutual funds saw an outflow for the second straight month after its introduction. The outflows in February from flexicap funds stood at Rs 4,497.23 crore which is lower than Rs 5,933.67 crore in January. On the other hand, multicap funds saw an inflow of Rs 4077.94 crore. G Pradeepkumar, CEO, Union AMC, said, “There are changes taking place in the multicap and flexicap category as some mutual fund houses are still in the process of converting multicap funds to flexicap funds. Even some investors might not be differentiating between the two. So, for the time being, one should look at both the categories together.”

The only other categories to see a net monthly inflow in equity schemes were large and midcap funds as well as focused funds that saw a net inflow worth Rs 156.85 crore and Rs 156.86 crore respectively.

The contribution of systematic investment plans (SIP) in February declined by Rs 495 crore from the previous month. The SIP contribution in January was at Rs 8,023.39 crore, whereas in February, the contribution stood at Rs 7,528.14 crore. NS Venkatesh, chief executive, AMFI, said, “The monthly SIP contribution for February 2021 has come down by Rs 495 crore owing to weekend dawning at the end of February and the shortfall would get accumulated and reflected in March 2021 monthly data.”

However, SIP AUMs as also retail equity folios hit an all-time high at Rs 4.21 lakh crore and 8.07 crore, respectively, which points to a disciplined approach adopted by the retail mutual fund investors. This has aided in overall net AUMs rising 14.17% to all time high at Rs 326.29 lakh crore.

Going forward, market experts believe some meaningful consolidation of markets could lead investors to come back. They added that there is general concern on valuations and so investors seem to be waiting on the sidelines.

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