Investors cash out of equity funds as markets zoom up

Investors pull out Rs 10816 crore from equity funds from April to December, shows the latest AMFI data.

Mutual fund investors have pulled out nearly Rs 10816 crore from equity funds as the BSE Sensex gained 26% in 2012. The industry recorded the highest redemptions in August and September at Rs 2096 crore and Rs 3306 respectively. The month of May was exception when equity funds saw net inflows of Rs 506 crore due to a more than 1000 points fall in BSE Sensex from 17318 to 16218. This suggests that investors are investing when markets dip, contrary to the popular belief that retail investors redeem when markets move down. The uptick in markets helped equity funds asset value gain 6% from Rs 1.56 lakh crore to Rs 1.66 lakh crore year to date.

Equity linked savings scheme (ELSS) too recorded net outflows to the tune of Rs 1686 from April to December.

Though income and liquid funds saw net outflows of Rs 40822 crore in December, the net inflows were positive at Rs 1.29 lakh crore this financial year.

Fears on the sustained performance of gold in the future moderated inflows in gold ETFs to Rs 1428 crore YTD compared to Rs 3248 crore during the corresponding period previous year (April 2011-Dec 2011).  Gold ETFs asset base went up from Rs 10000 crore levels to Rs 11992 crore YTD.

Investors continued to flock to gilt funds on the expectations of a rate cut by RBI. This category has seen net inflows from the last four months, including December.  Gilt funds recorded Rs 2551 crore net inflows this fiscal.

Among the new fund offers launched in December, Religare Bank Debt Fund collected Rs 113 crore while Union KBC Asset Allocation Fund mopped up Rs 72 crore. IDBI Gilt Fund garnered Rs 121 crore. The total inflows from all new funds launched in December, which were mostly close-ended income funds, stood at Rs 4732 crore.

The BSE Sensex has started 2013 with more than 300 points gain. It remains to be seen if investors will continue redeeming from equity funds in January as well.