Graphic: Redemption-to-inflows ratio for equity MFs drops

While net inflows into MF schemes have been strong this year, there are also a set of investors who have been redeeming their investments. On a year-to-date basis, gross redemptions stood at Rs 1.06 lakh crore. Part of this could be profit-taking and part of it reallocation. Equity schemes have seen inflows of over Rs 86,000 crore this year.

However, a decline in gross redemptions as a percentage of net inflows is a positive.

In January, the redemption-to-inflows ratio stood at 72.3. This weighed on net inflows, which stood at just Rs 4,880 crore. Last month, the ratio dropped to 54.6, helping funds report net flows of Rs 12,727 crore. However, on an absolute basis, the gross redemption figure hasn’t seen a sharp decline. So, net inflows are supported by high gross sales, indicating that investors are actively reshuffling their portfolios.

According to industry players, this is a healthy sign as money is not moving out of the system. They expect strong inflows into equity MFs to sustain. Chandan Kishore Kant decodes the numbers:

Illustration: Ajay Mohanty