Amfi says normalcy back in debt MFs; experts suggest wait for granular data
"One will have to see the breakdown on where the flows have come in,” said Kaustubh Belapurkar, director manager, research, Morningstar India.
Net flows in debt mutual fund schemes in May have more than double to Rs 94,224.29 crore from Rs 43,431.55 crore last month, the industry body said on social networking site Twitter.
“Thanks to the measures taken by the Sebi, RBI and Finance Ministry, normalcy has returned in debt markets and mutual funds,” Amfi said in a tweet.
Thanks to the measures taken by the @SEBI_India, @RBI and @FinMinIndia, normalcy has returned in debt markets and M… https://t.co/Sdazj0QwSC— AMFI India (@amfiindia) 1590992501000
Industry experts agreed that there was some slowdown in the outflows in credit risk funds in the second half of May but said it was prudent to wait for details of the data on inflows to draw a conclusion.
“One will have to see the breakdown on where the flows have come in. In the second half of May, credit risk funds saw a slowdown in outflows. That said, we need to see granular data,” said Kaustubh Belapurkar, director manager, research, Morningstar India.
In the aftermath of Franklin Templeton crisis, investors’ confidence in the debt market had seen a steep erosion. While there may be inflows in debt schemes, a few argued they may be more towards conservative options.
“The drying up of the corporate debt market and the Franklin event scared investors. People pulled out from debt schemes across the board in April. Even from those with limited risk,” said Dhirendra Kumar, CEO of Value Research
“It’s a churn happening now, and of course, people are getting more conservative. They have put more put in money in liquid and overnight funds,” Kumar added.
On May 20, The Securities and Exchange Board of India (Sebi) allowed listing of mutual fund units of the schemes that are in the process of winding up on the stock exchanges with immediate effect.
Also, Sebi allowed mutual funds to invest an additional 15 per cent of AUM in G-Secs & T-Bills in corporate bonds, banking & PSU and credit risk funds. G-Secs & T-Bills are considered to be one of the safer and more liquid forms of instrument.
Earlier in May, the Reserve Bank of India (RBI) announced a special liquidity window of Rs 50,000 crore for mutual funds, in view of the possible redemption pressure that the mutual fund industry may face after the abrupt winding up of six debt schemes of Franklin Templeton Mutual Fund.
Under the scheme, the RBI will conduct repo operations of 90-day tenor at a fixed repo rate of 4.40 per cent for banks.
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