Mutual funds witnessed outflows of Rs 11,134 crore under credit risk funds in a week after Franklin Templeton decided to shut down six credit risk schemes on April 24 blaming the ongoing “liquidity crisis” in the market. According to the Association of Mutual Funds of India (AMFI), net redemptions under credit risk funds stood at Rs 2,949.49 crore as of April 24, and peaked at Rs 4,294.36 crore as of April 27. “Thereafter, for the past three days i.e. on Tuesday April 28, April 29 and April 30, the net redemptions under credit risk funds stood at Rs 1,847.29 crore, Rs 1,251.17 crore and Rs 793.99 crore respectively,” AMFI said. As the credit risk fund category had assets of over Rs 55,000 crore till March, over 20 per cent of the funds was pulled out by investors in the last week of April alone. The overall debt segment had witnessed outflows of Rs 1.94 lakh crore in the month of March. However, AMFI said net redemptions under credit risk funds, one of debt mutual fund scheme category, which constitute less than 5 per cent of total debt mutual fund AUM, are tapering off substantially, post RBI’s announcement of special liquidity measure of Rs 50,000 crore for the mutual fund industry. “All mutual funds have met the redemptions in the normal course of business. There is 81.5 per cent drop in net redemptions in credit risk funds category on April 30 from the peak net redemptions as on April 27, courtesy measures announced by the RBI,” AMFI said. Nilesh Shah, Chairman, AMFI, said: ‘’Declining trend in net redemptions from credit risk funds is a welcome development, indicative of investors comfort from RBI’s special liquidity facility available to the MF industry. AMFI will continue to work with regulators for normal functioning of the market.” Franklin Templeton Mutual Fund, the ninth largest mutual fund in the country, had given a big jolt to the investor community with its decision to wind up six yield-oriented managed credit funds with effect from April 23, 2020. The six schemes — Franklin India low duration fund, dynamic accrual fund, credit risk fund, short term income plan, ultra short bond fund and income opportunities fund — have combined assets under management of around Rs 28,000 crore.
