Equity mutual funds see third straight month of outflows, debt funds also feel pressure

NEW DELHI: Equity mutual fund schemes saw a third straight month of outflow in September as investors continued to book profits instead of staying invested.

However, compared to August, the outflows narrowed substantially.

September month’s data from the Association of Mutual Funds in India (AMFI) shows that investors withdrew a net Rs 734.40 crore from equity-oriented funds thanks to a selloff in multi cap, large cap and contra funds. Equity mutual funds saw a total inflow of Rs 16,951.79 crore and outflow of Rs 17,686.20 crore.

Outflows during the month forced domestic institutional investors, which mostly comprises mutual fund managers, to limit their investments in September as they bought net Rs 110.3 crore worth of stocks, against a withdrawal of Rs 11,045.78 crore in the previous month. FIIs withdrew Rs 7,783 crore from the equity market during September.

“Investors seem to prefer focussed funds as well as large and midcap funds, resulting in a positive flow of Rs 824 crore and Rs 621 crore, respectively. ETF segment, too, had healthy inflows of Rs 3,515 crore. In comparison to the previous month, the data seem to reflect the confidence of investors in mutual funds,” said Gopal Kavalireddi, Head of Research, FYERS.

Debt mutual fund schemes also were under redemption pressure, with a net outflow of Rs 51,962.16 crore, largely due to outflows in liquid funds.

Investors withdrew Rs 65,951.79 crore from liquid funds and Rs 4,867.35 from ultra short duration funds in September. Money market funds also saw substantial outflows. A quarter-end outflow from liquid funds is a common phenomena as companies take out money to meet their expenses.

Total AUM of the mutual fund industry dipped Rs 52,090.99 crore to Rs 26.85 lakh crore. A part of the loss also reflects mark-to-market losses for the industry.