MF inflows dip by 68% in Nov to Rs 45,124 cr

Investments in mutual fund schemes saw a sharp 68 per cent decline in November to over Rs 45,100 crore over the previous month, as investors preferred to stay away from equity market.

At the end of November, investors poured in funds worth only Rs 45,124 crore in several MF schemes, with the maximum infusion coming into fixed income plans, according to the Association of Mutual Funds of India's (AMFI) monthly report.

At the end of October, the total inflow stood at Rs 1.41 lakh crore.

Despite the slump in the volume of net inflow, investors continued to prefer mutual funds as an investment option in almost all the schemes, except for equities which witnessed a outflow of Rs 1,109 crore during the reporting month.

"While institutional and retail investors are putting in money in fixed income or debt schemes, volatility in the equity market saw investors pulling out from such funds," Kotak AMC Head (Fixed Income and Product) Lakshmi Iyer said.

In November, fixed income plans with assured annual returns, saw a maximum investment of Rs 37,649 crore. Besides, liquid or money market funds, with higher liquidity and short maturities, saw inflows worth Rs 8,581 crore.

"With virtually no new fund offers coming in, investors preferred to book profit in equity schemes and invested in debt funds. They are waiting for better valuation to enter the equity market," she added.

Apart from equity schemes, Gilt funds, which invest in government securities, saw an outflow to the tune of Rs 260 crore in November.

"Ultra short-term or liquid funds and short-term bond funds were the favourites among the investors in November as corporates deployed money in this funds for very short duration during the month," Iyer said.

Analysts feel that after a hefty pull out from MFs in the last fiscal, investments are picking up this year, with June and September being the two months which witnessed outflows worth Rs 83,937 crore and Rs 1,44,327 crore respectively.

So far this fiscal, the MF industry has seen net inflows worth Rs 2,98,843 crore. While in the year-ago period, the industry had suffered a outflow worth Rs 30,530 crore.

"We might again see outflow at the end of December as banks and institutions would pull out money from debt schemes to meet their quarterly obligations. If the equity markets continue to remain buoyant we will see outflows from equity schemes as well," Iyer said.

Analysts believe that volatility in the stock markets has made banks park their surplus cash with income or debt funds with assured returns which helped the industry's average assets under management (AUM) breach the Rs eight lakh crore mark at the end of November.

The combined average AUM of the 37 fund houses hit the historic Rs 8,07,546.39-crore-mark at the end of November, an increase of six per cent over the month-ago period.