Equity mutual funds witnessed a enormous outflow of Rs 10,147 crore in December, generating it the sixth consecutive month-to-month withdrawal, even as the industry’s asset base surged to an all-time higher of more than Rs 31 lakh crore.
However, investors place in Rs 13,863 crore in debt mutual funds final month as compared to Rs 44,984 crore in November, information from the Association of Mutual Funds in India (Amfi) showed on Friday.
Overall, the mutual fund market witnessed a net inflow of Rs 2,968 crore across all the segments in the course of the period below evaluation, a great deal reduce than Rs 27,194 crore inflow noticed in November.
The assets below management (AUM) of the mutual fund market rose to an all-time higher of Rs 31.02 lakh crore in December-finish from Rs 30 lakh crore in November-finish on inflow from debt funds.
“The industry AUM at an all-time high, increase in retail folios and also SIP folios is reflective of investor confidence in mutual fund asset class,” Amfi CEO N S Venkatesh mentioned.
As per the information, outflow from equity and equity-linked open ended schemes was at Rs 10,147 crore in December as compared to Rs 12,917 crore in November.
The equity schemes had witnessed an outflow of Rs 2,725 crore in October, Rs 734 crore in September, Rs 4,000 crore in August and Rs 2,480 crore in July, which was their initially withdrawal in more than 4 years.
Prior to this, such schemes had attracted Rs 240.55 crore in June.
Since July, equity oriented mutual funds have witnessed a net outflow of more than Rs 33,000 crore.
Incessant promoting by mutual funds due to redemption by investors comes on the back of superior efficiency by stock marketplace more than the final nine months due to the fact the lows of March 2020.
With Nifty 50 index delivering returns of 3.5 per cent in October, 11.4 per cent in November and 7.8 per cent in December, mutual fund investors are indulging in continuous profit booking to shore up their substantial gains, mentioned Gopal Kavalireddi, Head of Research at FYERS.
Himanshu Srivastava, Associate Director – Manager Research of Morningstar India, mentioned, “The continuation of net outflows from equity funds could be attributed to profit booking/portfolio rebalancing as markets continue to touch new highs.
“Infact, the net outflow quantity would have been larger had it not been for the new fund delivers (NFOs) across a number of equity categories which collected Rs 7,600 crore,” Srivastava added.
Barring dividend yield and thematic funds, all the equity schemes saw outflows last month. Large cap and multi cap categories were the worst hit during the month, together witnessing a net outflow of Rs 7,417 crore in December.
Similarly, hybrid funds saw an outflow of Rs 5,932 crore during December. The outflow for the category stood at Rs 5,249 crore in November.
“While net inflows in equity funds and hybrid are certainly adverse, on the back of profit-led redemptions, the gross inflows are a healthful Rs 36,000 crore in these two categories,” Venkatesh said.
The equity and hybrid numbers indicate that many retail investors, after booking profits in October and November, have started putting money back in equities, said Gautam Kalia, Head – Investment Solutions at Sharekhan by BNP Paribas.
The trend may likely continue in 2021 as investors start considering the historically high index levels as the new normal and continue putting more money in equities, he added.
Gold exchange traded funds (ETFs) witnessed an inflow of Rs 431 crore last month. This comes following a pull out of Rs 141 crore in November, which was the first outflow since March when safe haven assets had seen outflow of Rs 195 crore.
Within the debt segment, corporate bond funds attracted Rs 8,610 crore, followed by overnight funds (Rs 7,410 crore) and liquid funds (Rs 5,102 crore).
“On the debt side, I count on RBI to continue sustaining accommodative stance and retain prices at present levels for economy to play a catch up, which is reflected in positive flows in corporate bond funds owing to the schemes holding excellent paper and also shorter duration techniques such as floater and dynamic bond schemes,” Venkatesh added.