February was challenging for MF industry, sees outflows of over Rs. 20,000 crore

The mutual fund industry reported net outflows of Rs. 20,083 crore in February, shared AMFI CEO NS Venkatesh in a press conference today. Majority of these outflows were in liquid and debt category.

SIP flows meanwhile, continued to remain strong with monthly SIP flows increasing to Rs. 8,095 crore in February from Rs. 8,064 crore in January. The industry also added 2.5 lakh SIP folios taking the total folio count to 2.59 crore folios in February. Venkatesh called SIPs the shining star of mutual fund industry.  According to him, retail investors have shown immense investment discipline in face of market volatility and border tensions.

Pure equities, ELSS, other ETF and foreign funds saw positive net inflows during the month. However, overall, the total industry outflow stood at Rs. Rs. 20,083 crore a sharp contradiction to the Rs. 1.52 lakh crore of inflows in the industry in January.

Liquid funds saw large outflows on the back of tightening liquidity. After briefly seeing positive inflows in January, debt fund flows turned negative again. Venkatesh attributes this to weak sentiment in long duration debt, contributed by the lack of g-sec rally after dovish Fed policy and rate cut by RBI.

Debt funds include income and gilt funds; both saw net outflows during the month.

Among equity funds, barring balanced funds, all other categories – pure equity, ELSS and ETFs tracking index have seen inflows. This is the second consecutive month of negative flows in balanced funds. The category started showing some weakness after government levied tax on dividend. However, Venkatesh expects this downturn to be temporary. He believes that the category will see positive flows again once markets recover and investors look at these funds from risk mitigation purposes.

While the pure equity category recorded net inflows of Rs.3948 crore, ELSS saw inflows of Rs.1174 crore in February.

Equity ETFs meanwhile recorded robust flows of over Rs. 5,000 crore due to the launch of ICICI Prudential Bharat 22 ETF.

Overall, the February end AUM for the industry stood at Rs. 23.16 lakh crore.

Monthend AUM February 2019

Source: AMFI