With rising interest rates, debt mutual fund investors are redeeming their investments from the money market and low to short-duration funds. In May, debt mutual funds reported a net outflow of Rs 32,722 crore after reporting a net inflow of Rs 54,756 crore in April. Higher yields and a preference towards equity have also affected the flows into debt funds.
Data from Association of Mutual Funds in India show money market funds witnessed the highest outflows of almost Rs 14,600 crore, followed by Rs 8,600 crore from short duration funds and Rs 7,105 crore from ultra-short duration funds. Only overnight, liquid and gilt funds witnessed inflows. There has also been a reduction in the number of folios from 73.43 lakh to 72.87 lakh between April and May 2022.
