Equity schemes have witnessed net outflows for the second straight month in August, as the recent sharp rally in equity markets led to profit booking by investors. In addition, the need for cash during the Covid-19 pandemic also induced investors to redeem money from their equity schemes.
Expert take
NS Venkatesh, CEO, AMFI said that the flight to safety trend has continued in August as well. As a result, investors are changing the asset allocation in their portfolio by redeeming their investments in equity and hybrid schemes and parking money in safer short debt categories such as ultra-short duration, low duration and money market funds. The AMFI CEO added that it may take one more quarter to see considerable positive inflows in equity schemes.
G Pradeepkumar, CEO, Union MF attributed the net outflows in equity and hybrid schemes to profit booking and financial woes of some of the small and medium enterprise business owners. The Union MF also said that many wealthy investors booked profits as a part of their tactical asset allocation. This asset allocation is likely to change in a few months again as they await another correction in equity markets.
Here are some key highlights of AMFI’s latest monthly inflows data.
Equity schemes
- Overall, equity schemes witnessed net outflows of nearly Rs.4,000 crore
- Large cap fund category witnessed the highest net outflows at Rs.1,553 crore followed by Rs.1,157 crore net outflows in multi cap schemes
- Large & Mid cap fund, mid cap fund, small cap fund, dividend yield fund and value fund/contra fund also witnessed net outflows
- Only focused fund, sectoral/thematic fund and ELSS witnessed net inflows
Debt schemes
- Overall, debt schemes witnessed net outflows of Rs.3,907 crore led by liquid schemes and overnight funds
- Liquid fund witnessed net outflows of Rs.15,814 crore, while overnight funds saw net outflows of Rs.10,298 crore
- Short duration categories such as ultra-short duration, low duration and money market funds saw good inflows as investors turned to these schemes for parking their short term money
- Each of these three debt fund categories saw more than Rs.5,000 crore of net inflows
Hybrid schemes
- Overall, hybrid schemes witnessed net outflows of Rs 4,819 crore despite launch of two new multi asset allocation schemes and an arbitrage fund
- In fact arbitrage fund category witnessed the highest net outflow at Rs 2,544 crore followed by Rs 2,355 crore outflow in aggressive hybrid schemes
SIP trend
- SIP inflow in August fell marginally to Rs.7,791 crore from Rs.7,830 crore in July
- Total number of SIP folios saw a marginal jump to 3.30 crore from 3.27 crore
- The AUM from SIPs rose to Rs.3.36 lakh crore from Rs.3.19 lakh crore
Broad trend
- Overall, the MF industry witnessed outflow of over Rs.14,550 crore
- However, the total AAUM for August rose to Rs.27.78 lakh crore from Rs.27.28 lakh crore in July due to mark-to-market increase in MF assets
