Outflows from equity mutual funds triple in four months

Equity mutual funds are seeing tremendous inflows lately, but these are accompanied by strong outflows. Data from AMFI shows a steady increase in the outflows from equity mutual funds. The outflows were Rs 7,932 crore in December, 2016, but they jumped to Rs 20,658 crore in March, 2017, three times increase in four months.

Experts are attributing it to various reasons, but most of them concur that the most important factor is the market touching it’s all time high. “There are investors who panic in such situations. Markets being around its all time high might push a lot of investors to sell their schemes,” says Rajiv Thakkar, Chief Investment Officer at PPFAS Mutual Fund.

He adds that there are some investors who sell their schemes at such times because of panic and then there are others who tend to time the market and get in after a correction. “Timing the market is not possible, but there are investors who tend to try it during such situations in the market,” says Thakkar.


Vidya Bala, Head of mutual fund research at Fundsindia.com, believes that the outflows are a result of fundamental issues. She says that the investors still do not believe in long-term investments and sell whenever they see volatility. “There are investors who invest in equities without any proper plan or goal. These investors tend to move out of the schemes in situations like these,” says Vidya Bala.

Whenever the market goes through a volatile phase, some investors tend to panic and sell their investments, say mutual fund advisors. However, they believe that investors should not base their investment decisions on the moods prevailing the market. “A retail investor should not think about what is happening in the market. Long-term investing is the best option,” says Vidya Bala.