MF equity schemes hit 5-month high outflows

Though talks to revive the mutual fund sector are making the rounds, investors accessing stock markets through equity schemes seem to be least interested in staying invested.

Net outflows from equity mutual funds have hit a five-month high in July. According to industry body Association of Mutual Funds in India (Amfi), equity schemes including tax-saving equity products witnessed a combined net outflow of Rs 949 crore during the month.

Industry’s executives blamed it on highly volatile markets, which resulted in profit booking in the early part of the month. They also added that the systematic investment plans (SIPs) continued to close down.

PRESSING THE EXIT BUTTON Fund flows and assets under management (AUM) in July (Rs cr)
Category	Net inflow/ (outflow)	AUM
Income	21,670	3,40,181
Equity	-804	1,55,134
Balanced	-64	16,118
Liquid/ money market	17,708	1,78,136
Gilt	21	3,298
ELSS	-145	23,068
Gold ETFs	95	10,398
Other ETFs	41	1,634
FoFs investing  abroad	-66	2,394
Total	38,456	7,39,361
ELSS: Equity-linked savings scheme; ETFs: exchange traded funds  Source: Association of Mutual Funds in India (Amfi)

During the month Bombay Stock Exchange benchmark index, the Sensex, remained volatile and oscillated in the range of 1,000 points between 16,600 and 17,600. Moreover, in the later part of the month even capital markets regulator, the Securities and Exchange Board of India (Sebi), had to intervene when some of the stocks cracked 15-20 per cent in a single-trading session.

“The month saw profit booking by investors. But it’s not good for the industry,” says the chief marketing officer of a mid-sized fund house. According to a chief executive officer, “SIPs are being closed and still no fresh money is pouring in. Another reason could be churning of portfolios and diverting funds from equity to debt category.”

Interestingly, such a high outflow has come in a month when industry saw two equity new fund offerings garner a reasonable combined sum of Rs 306 crore. These new products are Axis Focused 25 Fund and ICICI Pru US Bluechip Equity Fund.

Prior to July, the fund industry saw high outflow of around Rs 2,800 crore in February this year.

Meanwhile, gold exchange traded funds have once again seen positive traction as these managed to get fresh investments worth Rs 95 crore after witnessing outflows in the past few months. Income funds garnered the highest net inflows at Rs 21,670 crore, while the liquid and money market segment could mop up Rs 17,708 crore of fresh funds.

As on July 31, the industry’s assets under management stood at Rs 7.3 lakh crore, of which income funds dominated with 47 per cent share or Rs 3.4 lakh crore while liquid funds and equity funds had 24 per cent each of the total at 1.78 lakh crore.