MFs maintain good inflows on redemption fall

COIMBATORE: Though sales from diversified equity schemes have come down sharply in February, a huge fall in redemptions helped the mutual fund (MF) industry to maintain healthy net inflows for the month.

While sales from existing equity schemes dropped 36.1% to Rs 5,006 crore, redemptions, which hit a two-year high this January, plummeted 49% to Rs 3,492 crore, data with the Association of Mutual Funds in India (AMFI) shows. Redemptions from equity schemes for February are the lowest since last April.

After registering net outflows for five consecutive months, equity funds saw a turnaround in January on the back of a strong growth in sales from existing equity schemes. The MF industry has consolidated the gains in February with net inflows for the month coming at Rs 1,514 crore, AMFI data shows.

“Redemption pressure has come down significantly. Many investors who came at higher levels have made an exit,” says Gopal Agrawal, head, equity, Mirae Asset global investments. “People were in a wait and watch mode till the budget. Since the budget has largely been investor friendly we haven’t seen huge redemptions,” says a top official with a leading fund house.

Though foreign institutional investors (FIIs) are bullish on the Indian market and have pumped $1.1 billion so far this year, local fund houses continue to sell shares.

Local fund houses have net sold equity worth more than Rs 12,000 crore since September, Sebi data shows. In 2010 alone, they have offloaded shares worth Rs 2,458 crore (till March 4) at the net level.