While markets rallied, equity MF net monthly outflows continued for 3 months in a row

In September, 6 of 10 equity segments saw investors pulling out more money than they had put; smallcap, large & midcap, focussed schemes saw net inflows

Kumar Shankar Roy Oct 9, 2020

AMFI DATAEquity mutual funds suffered the third consecutive monthly outflow in September 2020, with Rs 734 crore net outflows. Investors, as a whole, continue to book profit in a market which has risen 55% since hitting a nadir on March 23 this year. The coronavirus pandemic, which has hit jobs and incomes, has also meant that investors continue to purchase only half of what they did pre-pandemic levels in India when it comes to equity schemes.

In August, the net monthly outflow number was Rs 4,000 crore. In July, the same was Rs 2,480 crore. The 3-month straight monthly outflows is the longest streak in recent history. Equity schemes comprises 10 different categories.

The SIP collection, driven mainly by equity plans, has stayed stagnant. Monthly contributions in September stood at Rs 7,788 crore, down marginally from Rs 7,792 crore in August and Rs 7,831 crore in July. Assets under management (AUM) of mutual fund companies that have come through the SIP route stayed put at Rs 3.35 lakh crore in September compared to Rs 3.36 lakh crore in August.

Mutual funds lobby AMFI wants to focus on SIP accounts, instead of the hard SIP-related numbers. NS Venkatesh, Chief Executive, AMFI, speaking on the September 2020 monthly mutual fund data said: “It is very heartening to observe sustained continuity in the matured investor behaviour. Systematic and disciplined Investment, as reflected in the robust rise in SIP accounts, rising number of new SIPs registered during September 2020…”

Investors pulled out of largecap (Rs 576 crore) and multicap (Rs 1143 crore) schemes for the fourth consecutive month. Midcap (Rs 68 crore) funds witnessed outflow for the third straight month. “Preference to Large and Midcap funds, Focused funds category, as also continued strong emergence of ETFs as the low-cost mutual fund investment avenue, have been the high points during September 2020,” added Venkatesh.

Focused funds saw net inflows of Rs 826 crore. Large & Midcap funds saw net inflows of Rs 621 crore. Akhil Chaturvedi, Associate Director and Head of Sales and Distribution, Motilal Oswal AMC said he sees gross sales has increased in Large & Midcap, Focused and Small–Midcap categories. Suggested changes by the regulator in the Multicap fund (i.e. minimum 25% exposure to Large, Mid and Smallcap respectively) has possibly led to some opportunistic buying in small and midcap funds.

On the debt funds side, September saw net outflows of over Rs 51,000 crore. This was mainly due to net outflows in liquid funds, ultra short duration funds, money market funds and short duration funds. Quarter end trends show that corporates usually take out money from debt schemes to show enhanced cash balances on their balance sheets; this money comes back in October.

In hybrid funds too, September saw net monthly outflows at Rs 4,219 crore. Balanced hybrid, dynamic asset allocation, arbitrage, equity savings funds saw outflows.

Kumar Shankar Roy

Kumar Shankar Roy is contributing editor with RupeeIQ. Kumar is a financial journalist, with a functional experience of 15 years. He tracks mutual funds, insurance, pension, PMS, fixed income/debt and alternative investments markets closely. He has worked for The Times of India, The Hindu Business Line, Deccan Chronicle Group, DNA, and Value Research, among others, across different cities in India. He is deeply interested in marrying data insights with actionable opinion. He can be contacted at kumarsroy@rupeeiq.com.

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