Equity mutual funds see outflows for second consecutive month

While domestic equities saw outflows, investors continued with their allocation to international funds and gold, with the categories seeing inflows of Rs 322 crore and Rs 908 crore.

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Equity mutual funds saw outflows for the second consecutive month with investors pulling out Rs 4,000 core in August, after withdrawing Rs 2,480 crore in July. This is the highest outlfow after March 2016.

“Investor confidence is low due to Covid -19. After seeing the sharp rise in their equity mutual fund portfolios from the March lows, there is a tendency to book profits and wait before redeploying, “ says DP Singh, Executive Director, SBI Mutual Fund.

Mutual fund distributors point out that investors are not convinced about the current rally as many of them believe it will be a long time before economic growth bounces back and hence prefer to hold cash. With the pandemic still in progress, unlock exercise on, the real picture on corporate growth and how it will pan out is unclear.


While domestic equities saw outflows, investors continued with their allocation to international funds and gold, with the categories seeing inflows of Rs 322 crore and Rs 908 crore.

Hybrid schemes that invest in a mix of debt and equity saw outflows of Rs 4819 crore.

Debt schemes were a mixed bag with overnight and liquid funds seeing outflows due to month end considerations. These schemes saw outflows of Rs 26,000 crore. However, investor poured money into ultra short term, money market and low duration funds with such schemes cumulatively mobilizing Rs 18,706 crore. Overall, the segment saw outflows of Rs 3908 crore.
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“A sharp up move in yields in August rattled investors, with many of them moving to low duration or ultra short term products,” says Anand Varadarajan, Business Head, Tata Mutual Fund.

Total assets under management of the mutual fund industry grew to Rs 27.78 lakh crore from Rs 27.28 lakh crore. Inflows through systematic investment plans (SIPs) continued to be steady with monthly collections at Rs 7,792 crore in August, compared to Rs 7,831 crore in July.

Within equities, multicap funds and large cap funds saw outflows of Rs 1157 crore and Rs 1554 crore respectively. Midcap and small cap funds saw outflows of Rs 603 crore and Rs 104 crore. ELSS schemes saw inflows of Rs 29 crore and thematic funds saw inflows of Rs 370 crores . Balanced hybrid funds and dynamic asset allocation funds too saw outflows of Rs 2355 crore and Rs 375 crore respectively. Arbitrage funds saw outflows fof Rs 2544 crores, as returns dwindled to less than 4% on an annualized basis.

Categories like corporate bond fund saw inflows of Rs 1955 crore, while dynamic bond saw inflows of Rs 1544 crore, while gilt funds saw outflows of Rs 1122 crore. low duration and short duration funds saw inflows of Rs 25,750 crore while banking and PSU debt funds saw inflows of Rs 6323 crore.
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