Retail investors continue to pull money out equity mutual funds, even as the benchmarks continue to scale new highs. Open-ended equity-oriented schemes continued to witness outflows for the fourth consecutive month in October. Data from the Association of Mutual Funds in India (Amfi) shows that equity funds saw net outflows of Rs 2,724.95 crore in October, as investors booked profits and pulled out money from the multicap funds.
However, inflows into debt schemes picked up in October, with open-ended debt-oriented schemes seeing net inflows of Rs 1.10 lakh crore. Barring credit funds which continued to see outflows of Rs 414.85 crore, all the categories of debt funds saw net inflows.
In the last four months, equity mutual funds have seen net outflows of nearly`10,000 crore. In July and August, equity schemes saw outflows of Rs 2,480.35 crore and Rs 3,999.62 crore, respectively. The pace of outflows came down in September with monthly net outflows coming down Rs 734.40 crore, but October has seen a sharp spike in net outflows.
G Pradeepkumar, CEO, Union AMC, said, “I believe in October, the high networth individual (HNIs) booked profits as markets were fairly firm and there was expectation of volatility ahead of US elections. However, the equity markets continued to rally in October.” In October, Sensex and Nifty were up by 4.06% and 3.51%, respectively.
Market participants also said that sharp outflows from equity schemes were also due to the redemptions from the multicap schemes due to the regulatory changes. Data from Amfi shows that multi cap schemes saw net outflows of Rs 1,902.74 crore in October.
All the categories in equity schemes, barring sectoral funds, saw outflows last month. While there were net outflows from the equity schemes, the inflows into the systematic investments plans (SIPs) stood at Rs 7,800 crore slightly better compared to September where it had seen inflows of Rs 7,788 crore. N S Venkatesh, CEO, Amfi, said, “Rise in both SIP contribution and SIP assets under management (AUM) during October 2020 and continued slowing outflow in equity schemes reinforces the retail investor confidence in the mutual fund as an asset class.” Total SIP AUM surged from Rs 3,35,571.57 crore as on September 30, 2020, to Rs 3,42,018 crore as on October 31, 2020.
On the other hand, open ended debt-oriented schemes saw net inflows of Rs 1.10 lakh crore in October. Swarup Mohanty, chief executive officer of Mirae Asset Global Investments (India), said, “Despite equity markets being all time, invetsors are skeptical to invest in equities due to the crises we have seen in the past few months and there is flight to safety toward debt funds.”
Categories such as liquid funds, money market funds, short duration funds and corporate bond funds saw inflows of Rs 15,000 crore in October. Barring credit funds which continued to see outflows of Rs 414.85 crore, all the categories of debt funds saw net inflows. Overall mutual fund industry saw net inflows of Rs 98,575.96 crore in October, while net AUM as on October 2020 was highest ever at Rs 28.22 lakh crore for the mutual fund industry.