Mutual Funds suffer 1.5 lakh cr outflow in Sep, liquid funds contributes most

Investors pulled out more than Rs 1.5 lakh crore from mutual fund schemes in September with liquid funds contributing the most to such outflows amid persisting weak confidence in debt-oriented plans.

This comes after a net inflow of Rs 1.02 lakh crore in August, according to data by the Association of Mutual Funds in India (Amfi).

In recent months, the mutual fund industry has been grappling with redemption pressure in the wake of debt crises at various groups, including IL&FS, Essel and Dewan Housing Finance Corporation (DHFL).

According to the data, mutual fund schemes witnessed a redemption of Rs 1.52 lakh crore last month.

The massive redemption could be attributed to debt-oriented schemes, which saw an outflow of Rs 1.58 lakh crore.

Among debt-oriented schemes, liquid funds -- with investments in cash assets such as treasury bills, certificates of deposit and commercial paper for shorter horizon --- saw an outflow of Rs 1.41 lakh crore.

Other debt schemes such as ultra short duration fund and money market schemes witnessed an outflow of Rs 6,783 crore and Rs 6,278 crore, respectively.

Further, credit risk fund saw an outflow of Rs 2,351 crore while the same for low duration fund stood at Rs 2,131 crore.

"Liquid funds have seen redemptions which is a phenomenon we have seen at the quarter end, for the advance tax purposes and the same is reflected in this month, September being a quarter-end," Amfi CEO N S Venkatesh said.

However, equity schemes and gold exchange-traded funds witnessed fund infusions in the month under review.

Equity and equity-linked saving schemes saw an inflow of Rs 6,489 crore last month, much lower than Rs 9,090 crore infused in August. Besides, gold exchange-traded funds witnessed an infusion of Rs 44 crore against an inflow of Rs 145 crore in August.

The outflow from debt schemes has pulled down the asset base of the MF industry, comprising 44 players, by 4 per cent to Rs 24.51 lakh crore in September-end from Rs 25.47 lakh crore at end-August.