Equity mutual funds saw their first outflow in four years in July as profit booking by investors saw them making net withdrawals of Rs 2,480.35 crore. In the preceding month, the net inflows into these schemes stood at Rs 240.55 crore.
The schemes have been showing a declining trend since April, attracting Rs 11,723 crore in March, Rs 6,213 crore in April and Rs 5,257 crore in May.
Data from the Association of Mutual Funds in India (Amfi) on Monday showed that the outflows were maximum in the case of multi-cap funds at Rs 1,033 crore (net outflows of Rs 778 crore in June). It was followed by mid-cap, contra and focussed funds. Barring equity-linked saving schemes that saw an inflow of Rs 279 crore) and focused fund (Rs 535 crore) categories, all the other equity segments witnessed a net outflow.
Experts said that the net outflow was because of profit booking by investors amid concerns about expensive valuations in the market despite the rising number of coronavirus cases in India and an economy under contraction.
Overall, the mutual fund industry witnessed a net inflow of Rs 89,813 crore across all segments last month, much higher than Rs 7,265 crore seen in June. This inflow has been attributed to the infusion in liquid and low-duration funds. The assets under management (AUM) of the industry as a whole increased 5 per cent to Rs 27.3 lakh crore.
Amfi chief executive N. S. Venkatesh attributed the outflow to withdrawal from multi-cap and large cap funds because of profit-booking by investors.
He added that investor confidence in the market continues to be robust, going by rising net fresh SIP registrations and overall increase in the average asset under management of mutual funds since the pandemic. Debt mutual fund schemes, he noted, are an attractive proposition, with a benign interest rate environment leading to better yields as also superior risk management by the debt fund managers.
“The outlook for the mutual fund flows for the rest of 2020-21 would continue to be encouraging with rising digital-driven inflows, accommodative stance on interest rates by the RBI, improving macro-economic environment and a pick-up in economic activity on the back of easing of lockdown,’’ Venkatesh observed.
