Net inflows in equity funds fell to Rs.240 crore due to profit booking

The latest AMFI data shows a huge decline in pure equity funds’ net inflows due to outflows in large cap funds and multi cap funds. The Rs.5,000 crore negative net change reverses the trend of the last few months.

Both the categories saw sudden outflows in June compared to the previous month. Multi cap funds saw an outflow of Rs.777 crore as against an inflow of Rs.758 crore in May. Similarly, large cap funds witnessed an outflow of Rs.212 crore as against inflow of 1,555 crore in May. 

Experts say outflow is due to a sharp bounce back in the equity market in the last one month which led to profit booking by investors.

Swarup Mohanty, CEO, Mirae Asset MF believes that many retail investors have redeemed their money from equity funds last month. “Due to the whole pandemic impact and the market gains recently, investors have redeemed their investments to manage their cash flow requirements. However, the continuing outflow trend in hybrid funds should be a matter of worry,” he added. Among hybrid funds, only arbitrage funds continued to get positive inflows.

Navneet Munot, CIO, SBI Mutual Fund said that investors have booked profit after the sharp run up in the equity market in the past few weeks.

Seconding his views, Sunil Subramaniam, MD & CEO, Sundaram Mutual Fund said that profit booking has been seen in categories like large cap and multi cap funds as these stocks saw highest appreciation due to the uptick in economic activities. 

Meanwhile, Saurabh M Nanavati, CEO of Invesco MF feels that this was the best chance for investors to redeem their investments who were under wait and watch mood. “This is only a short term profit booking case, investors will come back in the next few months,” he said.  

Further, monthly SIP inflows came down below Rs.8,000 crore mark at Rs.7,927 crore in June. The total number of folios also saw a marginal dip as it fell to 3.20 crore from 3.23 crore. The total SIP AUM stood at over 3 lakh crore. 

Overall, debt funds also saw a fall in net inflows in June to Rs.2,861 crore from Rs.63,665 crore. This indicates a net decrease of Rs.60,803 crore driven primarily by the outflows in liquid funds.

Corporate bond funds saw a hike in net inflows to Rs.10,737 crore from Rs.3,831 crore. Categories like ultra short duration funds, low duration funds, money market funds and short duration funds also saw considerate inflows in June. 

Talking about flows in debt funds, Munot said, “Many investors have been investing in safer fixed income funds like corporate bonds and banking and PSU funds due to lower bank FD rates.”

Overall, the MF industry AUM reached the Rs.25 lakh crore AUM mark in June. NS Venkatesh, CEO, AMFI said, "Reducing interest rates, gradual unlocking of economic activity with expected return to normalcy has seen renewed buoyancy in markets leading to mutual fund AUM crossing Rs.25 lakh crore mark for the first in the last three months."