Equity mutual funds see outflows for fourth straight month

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The total assets under management (AUM) of India’s mutual fund industry rose to Rs 28.22 lakh crore at the end of October, its highest ever, aided by strong inflows in debt mutual funds. However, equity mutual funds saw outflows for the fourth straight month as investors continued to book profits amid a surge in equity markets.

In October, debt-oriented mutual funds saw net inflows of over Rs 1.10 lakh crore, according to data from the Association of Mutual Funds of India (AMFI). The inflows were primarily into shorter duration funds; while liquid funds saw inflows of Rs 19,583 crore, ultra-short duration funds saw inflows of Rs 13,654 crore. Corporate bond funds too saw good inflows of Rs 15,052 crore. However, credit risk funds continued to see outflows.

People investing in equity-oriented mutual funds have been pulling out their funds over the last few months, as equity markets have bounced back strongly from their lows hit in March, and that trend continued last month. Equity funds saw outflows of Rs 2,725 crore in October, while hybrid funds saw outflows of Rs 1,682 crore. In September, equity funds had seen outflows of Rs 734 crore, while hybrid funds saw outflows of Rs 4,219 crore.

Except for sectoral and thematic funds and large and midcap funds, all other equity categories witnessed net outflows last month.

Interestingly though, the mutual fund SIP (systematic investment plan) accounts rose to 3.37 crore, with the overall monthly SIP contributions reaching Rs 7,800 crore, compared with Rs 7,788 crore in September. The total SIP AUMs have now touched Rs 3.42 lakh crore as on October 31.

“The number of folios as well as funds mobilised during the month was higher than September, however, at the same time, the redemption amount too shot up. This indicates that while there are new set of investors who are investing in the markets, existing investors continue to book profit given the surge in the equity markets across segments in the recent times,” said Himanshu Srivastava, associate director–manager research at Morningstar India.

N.S. Venkatesh, the CEO of AMFI said that the rise in SIP contributions and SIP AUMs as well as slowing outflow in equity schemes reinforced the retail investor confidence in mutual funds as an asset class.