Equity Mutual Funds See Outflows For Eighth Straight Month
A broker reacts while looking at financial data on computer screens on a trading floor. (Photographer: Luke MacGregor/Bloomberg)

Equity Mutual Funds See Outflows For Eighth Straight Month

Equity mutual funds witnessed outflows for the eighth straight month even as benchmark indices scaled new records after the Union Budget.

Investors pulled out a net Rs 4,534.3 crore from equity and equity-linked mutual fund schemes in February compared with an outflow of Rs 9,253.22 crore in January, according to data released by the Association of Mutual Funds in India. That’s the eighth straight month of outflows from such schemes.

The first 11 months of the financial year have seen a net outflow of Rs 34,360.95 crore compared with a net inflow of Rs 83,787.69 crore in the entire year to March 2020.

Equity mutual fund schemes have seen consistent outflows even as markets rebounded from the March 2020’s pandemic-driven selloffs and rose to new records. India’s benchmarks rose close to 7% in February despite a bout of volatility in the last few days of the month. This was also the best February for the indices in at least two decades.

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Category-Wise Trends

Selling continued in large, mid and small caps, albeit at a slower pace. Multi caps witnessed inflows for the second straight month.

While investors pulled out of large-cap funds for the ninth straight month, small caps witnessed outflows for the fifth month in a row. Mid caps, though have been witnessing selling since July 2020, reported the least outflow among all categories.

AMFI started offering granular data since April 2019.

SIP Flows

Individual contributions through systematic investment plans dropped for the second straight month to below the Rs 8,000-crore mark in February 2021.

Net Flows

Overall, the mutual fund industry across categories saw a net inflows of Rs 4,090 crore compared with an outflow of Rs 35,586 crore in January.

A Rs 17,301.6-crore net investments in the liquid funds—used by companies to park short-term cash—cushioned the overall withdrawals seen in the industry during the reported month.

Outflows resumed in credit risk funds after a month’s blip. Investors withdrew a net Rs 829.5 crore from such schemes compared with inflows worth Rs 366 crore in January.

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