Uncertain market environment and profit-booking after a strong rebound paved the way for yet another round of outflows from equity schemes. The total outflow from the equity schemes increased to Rs 3,999 crore in August compared to Rs 2,480 crore registered a month ago.
Data from the Association of Mutual Funds in India (AMFI) showed that the multi-cap and large cap fund categories witnessed massive outflows of over Rs 1,000 crore during the month. While the magnitude of sell-off remained the same for multi-cap funds, compared to last month, it jumped nearly four times for the large cap funds. Both these categories have been registering outflows for the past three months.
"When the recovery happens after a steep fall in the market, it generally coincides with outflows. This trend was noted after global finance crisis too. Besides, this is also a function of the uncertain environment where the markets have recovered significantly but we are still seeing significant negative data both on the virus and the economy front. We have seen multiple market participants advising caution and this is a cautious stance of the investors," said Santosh Kumar Singh, Head of Research, Motilal Oswal Asset Management Company.
The Nifty 50 and the S&P BSE Sensex rose by 2.8 per cent and 2.7 per cent, respectively, during the month.
"I do not see it as a long-term trend. Once we see clarity emerging, we would again start seeing inflows in the asset management industry given financialisation of assets," adds Singh.
Meanwhile, net assets under management of mutual funds increased to Rs 27.5 lakh crore by August-end from Rs 27.1 lakh crore in July 2020. This translated into a rise of 1.4 per cent. Mutual fund industry mobilised Rs 5.6 lakh during the month and saw redemptions of Rs 5.7 lakh crore. The net outflows during the month amounted to Rs 14,553 crore.