Equity-oriented mutual funds witnessed a massive outflow of Rs 12,917 crore in November, making it the fifth straight month of withdrawal as investors booked profit amid higher market valuations.
“We still believe that there is significant amount of money that can come back to the market in the event of any correction. The medium to long term potential of the equity markets remain strong,” G Pradeepkumar, CEO of Union AMC, said.
Despite the outflow, the Assets Under Management (AUM) of the industry reached a record Rs 30 lakh crore at the end of November from Rs 28.23 lakh crore in October, data from the Association of Mutual Funds in India (Amfi) showed on Tuesday.
“Accommodative credit policy stance, continuous global liquidity flows, coupled with improved economic sentiment driven by healthier corporate earnings and positive GDP growth forecast has led to Indian mutual fund industry AUMs crossing historic highs and touching highest ever Rs 30 lakh crore landmark,” N S Venkatesh, Chief Executive of Amfi, said.
On the other hand, investors put in Rs 44,984 crore in debt Mutual Funds (MFs) last month as compared to Rs 1.1 lakh crore in October.
Overall, the mutual fund industry witnessed a net inflow of Rs 27,914 crore across all segments during the period under review as against an inflow of Rs 98,576 crore in October.
As per the data, outflow from equity and equity-linked open ended schemes was at Rs 12,917 crore in November compared to Rs 2,725 crore in October.
The equity schemes had witnessed an outflow of Rs 734 crore in September, Rs 4,000 crore in August and Rs 2,480 crore in July, which was the first withdrawal in over four years. Such schemes had attracted Rs 240.55 crore in June.
All the equity schemes witnessed outflows last month.
“While gross purchases (new investments) remained steady, the pace of redemptions picked up as markets made new highs, suggesting investors looked to book some profits given the higher market valuations. Since July, equity-oriented mutual funds have witnessed a net outflow of Rs 22,500 crore,” Kaustubh Belapurkar, Director (Manager Research) at Morningstar India, said.
Making similar statement, Amfi’s Venkatesh said investors booked profits in equity funds owing to surge in equity valuations.
Within the equity segment, large-cap was the worst hit with an outflow of Rs 3,289 crore in November, followed by mid-cap (Rs 2,842 crore), value fund (Rs 1,323 crore) and multi-cap (Rs 1,317 crore).
Contributions in Systematic Investment Plan or SIP too dropped to Rs 7,302 crore last month from Rs 7,800 crore in October.
It is also significant to note that there has been a healthy addition of 3.39 lakh SIP accounts in November.
“SIP numbers have remained robust which is a good indication of continued retail interest. It must be kept in mind that since the last three days of November were non-business days, a significant amount of SIP flows might not be reflected in the official numbers that have been released,” Pradeepkumar said.
Hybrid schemes — which invest in stocks, bond and gold — also saw a net outflow to the tune of Rs 5,249 crore in November compared to Rs 1,681 crore in the preceding month.
Apart from equity, gold Exchange Traded Funds (ETFs) witnessed an outflow of Rs 141 crore last month. This was the first outflow since March, when safe haven assets had seen a pull out of Rs 195 crore.
In October, the inflow was Rs 384 crore.
Among the debt-oriented schemes, investors have put in Rs 27,107 crore in low-duration fund, followed by Rs 13,093 crore in short-duration fund and Rs 11,093 crore in corporate bond funds.
Outflows from credit risk funds stood at Rs 15.39 crore, the lowest recorded this year.
On the debt side, Venkatesh said investors are aligning their allocation more towards duration schemes and corporate bond funds to maximise their debt returns.
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