Equity mutual fund schemes continued to post outflows for the fourth consecutive month as repayment pressure continued, while the systematic monthly investment plan (SIP) increased slightly. According to data from the Association of Mutual Funds in India (AMFI) released on Monday, the net outflow from equity mutual fund schemes was ₹3991.01 crore in October.
This is compared to an output of ₹1,009.01 crore and ₹4,028.83 million rupees in the previous two months. Redemption in these schemes was in ₹20 238.98 crore in October higher than ₹17,686.19 crore in the previous month.
“The continued rally in equity markets, combined with the expectation of volatility around the US elections, appears to have prompted some investors to post equity gains and switch to short-term debt funds. Many of them can go back to equity funds if there is a correction, “said G Pradeepkumar CEO Union AMC.
During October, SIP accounts grew to Rs 3.37 crore, causing an increase in the monthly SIP contribution to ₹7,800 crore, compared to ₹Rs 7,788.37 crore in the previous month.
“The amount of folios and funds mobilized during the month was higher than in September, however, at the same time, the amount of the exchange also shot up. This indicates that while there is a new group of investors who are investing in the markets, existing investors continue to post gains due to the rise in equity markets in all segments of late “, Himanshu Srivastava, Associate Director – Managing Director Research, Morningstar India said.
Meanwhile, investors continued to allocate more money to debt fund categories such as corporate bond funds, money market funds and short duration funds, all of which posted net inflows in excess of ₹15,000 crore. Liquid funds, on the other hand, which generally account for the majority of debt inflows, saw an inflow of ₹19,582.7 crore, not substantially higher than other categories.
“In April, many wealth managers and distributors made a call asking investors to move out of debt categories that invest in credit or duration and into liquid funds due to the initial impact and lockdown of Covid. That fear factor is now over. it’s fading and the appetite for risk is returning.
Liquid funds are giving returns of 4-4.5% and that is not enough for many investors. A category like corporate bonds or bank debt and PSU will perform higher without significantly compromising credit quality. Of course, the duration risk in these categories is higher, “said Santosh Joseph, founder of Germinate Wealth Solutions, a mutual fund distributor.
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