Debt mutual funds see Rs 92,248-cr outflow in June on uncertain macro environment

Out of the 16 fixed-income or debt fund categories, 14 witnessed net outflows during the month under review. The heavy withdrawal was seen from segments, such as overnight, liquid and ultrashort-term duration funds.

The only categories that witnessed inflows were the 10-year gilt funds and the long duration funds. One of the reasons for the net outflow could be a sign of investors’ short-term money requirements due to the current market scenario of rising repo rates and inflation rates, Priti Rathi Gupta, Founder,– India’s first financial platform for women, said.

“An uncertain macro environment, driven by expectations around an increasing rate cycle, higher commodity prices and slowdown in growth have likely led to investors steering clear of debt funds,” Kavitha Krishnan, Senior Analyst – Manager Research, Morningstar India, said.

“Single-digit returns, rising bond yields and the rising inflation have also likely led to investors choosing to redeem their investments in debt funds in favour of other investment avenues,” she said.

In addition, corporates and businesses choosing to take out their short-term money parked in overnight and/or liquid funds for their business activities has also likely led to the outflows across these categories, she added.

The outflow has pulled down the asset base of debt mutual funds to Rs 12.35 lakh crore by June-end from Rs 13.22 lakh crore at the end of May.