Despite the upswing in the market, equity-oriented mutual fund (MF) schemes witnessed net outflows for the seventh consecutive month, in January. Net outflows — the difference between purchase and sale of MF units -- for the month stood at Rs 9,253 crore.
Since July, investors have pulled out over Rs 42,200 crore from equity schemes, even as the Sensex rallied nearly 50 per cent during this period.
While the quantum of outflows in January was lower when compared to the preceding two months, it was still greater than the seven-month average of Rs 6,000 crore, the data from Association of Mutual Funds in India (Amfi) shows.
Market players said profit-booking following the sharp rebound in the market from March 2020 lows and direct equity investing were the key reason for the outflows.
G Pradeepkumar, chief executive officer, Union Asset Management Company (AMC), said: “In the past few months, we have seen investors booking profits and moving money to short-term debt funds. But in January, that did not happen. We see a dangerous trend of people selling mutual funds and playing into the equity markets directly.”
Barring multi-cap, dividend yield, and thematic funds, all other sub-categories in the equity segment recorded outflows in January.
Large-cap funds saw outflows of Rs 2,853 crore, while value funds also witnessed outflows of Rs 1,640 crore. The new flexi-cap category also saw outflows of Rs 5,994 crore.
Last month, several MF houses recategorised their multi-cap schemes as flexi-cap, following Sebi’s move to tweak the definition.
Since June, the multi-cap category has been witnessing huge net outflows. In January, 16 multi-cap funds were re-categorised as flexi-cap funds. So the multi-cap outflows have now slipped over to flexi-cap, explained Himanshu Srivastava, associate director-manager research, Morningstar India.
The inflows through systematic investment plans (SIPs) stood at Rs 8,023 crore, while assets under management (AUM) of SIPs were Rs 3.9 trillion in January 2021.
“While equity funds have seen redemptions, SIPs numbers look positive and there has been an increase in the folios in equity-oriented schemes,” said Pradeepkumar.
As of January, folios of equity-oriented schemes stood at 64.4 million, compared to 63.7 million in December — an increase of 700,000.
The debt segment, too, witnessed outflows of Rs 33,409 crore in January.
In January, liquid funds saw outflows of Rs 45,316 crore. As much as Rs 8,041 crore was pulled out of low-duration funds.
Other categories, such as short-duration funds, corporate bond funds, and banking and PSU funds, also witnessed net inflows. Credit-risk funds saw net inflows of Rs 366.44 crore in January. Investors had turned averse of this segment after troubles at Franklin Templeton last year.
“Owing to regulatory measures to ease liquidity, and also the stance to hold on to the policy rates, some of the debt categories like corporate bond fund, banking & PSU fund, short-duration funds have seen positive flows. Even credit-risk funds are now witnessing positive flows, given the risk-return dynamics is working in favour of retail investors,” said N S Venkatesh, CEO, Amfi.
Overall, the MF industry saw net outflows of Rs 35,587 crore; net AUM stood at Rs 30.5 trillion.