Home > Finance > Equity MFs see first outflow in over 4 years in July on profit-booking

Equity MFs see first outflow in over 4 years in July on profit-booking

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Overall, the mutual fund industry witnessed a net inflow of 89,813 crore across all segments last month, much higher than 7,265 crore seen in June, data by Association of Mutual Funds in India showed on Monday.

This inflow could be attributed to infusion in liquid funds and low duration funds.

As per the data, outflow from equity and equity-linked open ended schemes was at 2,480.35 crore in July as compare to an inflow of 240.55 crore in June.

Such schemes had attracted 5,256 crore in May, 6,213 crore in April, 11,723 crore in March, 10,796 crore in February and 7,877 crore in January.

July 2020 saw the first outflow since March 2016, when equity schemes witnessed a pull out of 1,370 crore.

In July this year, except for equity linked saving schemes (ELSS) and focused fund categories, all the other equity categories witnessed net outflow.

Association of Mutual Funds in India (Amfi) Chief Executive N Venkatesh attributed the outflow from equity-oriented funds to withdrawal from multi-cap and large cap funds due to profit booking by investors.

“Equity-oriented mutual funds witnessed their first major monthly net outflow in a long time. Multi-cap fund category was the worst hit followed by mid-cap and value fund categories,” said Himanshu Srivastava, Associate Director – Manager Research at Morningstar India.

This could be largely attributed to investors booking profit given the surge in the equity markets, across market segments, in the recent times, he added.

Multi-cap, midcap, value fund and multi-cap saw outflows to the tune of 1,033 crore, 579 crore, 549 crore and 365 crore, respectively, during the month under review. However, focussed funds attracted 535 crore, while the same for ELSS was 279 crore.

Apart from equity funds, overall hybrid funds saw an outflow of 7,301 crore.

With equity markets doing well and stable scenario in the fixed income markets, hybrid schemes too witnessed significant net outflows, with viewing this scenario as a good exit opportunity, Srivastava said.

Within the hybrid schemes, balanced hybrid or aggressive hybrid fund, whose mandate is to invest between 65-80% of assets in equities, witnessed a net outflow of 2,196 crore in July. “This category has been witnessing consistent net outflow for a long time, given the challenging scenario in both equity and debt markets earlier,” he added.

Fixed income securities or debt funds saw an inflow of 91,392 crore last month compared to 2,862 crore in June.

Among fixed-income securities, low duration funds saw an infusion of 14,219 crore, liquid schemes ( 14,055 crore) corporate bond funds ( 11,910 crore) and banking and PSU funds ( 6,323 crore).

However, credit risk funds saw an outflow of 670 crore in the period under review, which was much lower than a withdrawal of 1,494 crore in June, 5,173 crore in May and 19,239 crore in April.

Besides, investors are preferring safe haven assets, gold exchange traded funds (ETFs), as such instruments saw an inflow of 921 crore last month as compared to 494 crore witnessed in June.

The assets under management of the 45-players mutual fund industry rose to 27.12 lakh crore in July-end from 25.5 lakh crore in June-end.

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