Debt flows take MF assets to record high of Rs 28 lakh crore

MUMBAI: Strong inflows in debt schemes lifted mutual fund industry assets to a record high at Rs 28.2 lakh crore at the end of October, although the rise was partially limited by outflows from equity funds, data from industry body AMFI showed. With a net inflow of Rs 1.1 lakh crore in debt schemes and a net outflow of Rs 2,725 crore from equity funds, the fund industry recorded an overall positive flow of Rs 98,576 crore in October, the industry trade body said.

After showing a declining trend for seven consecutive months, SIP inflows showed a marginal uptick during the month. In October, monthly contribution from SIPs was at Rs 7,800 crore — up marginally from Rs 7,788 crore in September. At the end of the month, total SIP AUM rose to a little over Rs 3.4 lakh crore, AMFI data showed

In the debt segment, the surge in assets came mainly from liquid, money market, short duration, corporate bond and ultra-short duration funds. On the equity side, while sectoral & thematic funds witnessed net flows, multi-cap and value & contra funds witnessed outflows. Multi-cap funds saw outflows as the Sebi-imposed deadline for these schemes to rejig their portfolio neared, industry observers said.

Flows into debt funds usually remain volatile due to substantial corporate investments in schemes with extremely short durations, equity funds usually show a steady trend. Industry players feel it would take a while for the trend of outflow from equity schemes to reverse.

According to Jean-Christophe Gougeon, director (investment solutions), Sharekhan — an arm of French financial house BNP Paribas, for four months in a row starting July this year, equity flows have been negative, while in June net collections were marginally positive. Seen in the light of huge flows into debt funds, this is “an obvious signal that MF investors are currently cautious”. “The improvement on the Covid-19 front could help MF investors to come back step by step to equity MFs,” Gougeon said.