The outflows from equity mutual funds continued for the fifth straight month in November, rising a whopping 374 per cent from the last month. The segment saw a net outflow of Rs 12,917 crore compared to Rs 2,725 crore in October. This was the highest ever monthly outflow from equity MFs. However, the overall asset under management (AUM) of the mutual fund industry hit a record high of Rs 30 lakh crore. The SIP AUM surged to Rs 3.78 lakh crore with an addition of 3.39 lakh SIP accounts to 3.40 crore in November from 3.37 crore in October.
"While gross purchases (new investments) remained steady, the pace of redemptions picked up as markets made new highs, suggesting investors looked to book some profits given the higher market valuations. Since July, equity-oriented mutual funds have witnessed a net outflow of Rs 22,500 crore. Outflows were witnessed across all equity fund categories," says Kaustubh Belapurkar, Director - Manager Research, Morningstar India.
Commenting on the November mutual fund data, N S Venkatesh, Chief Executive, AMFI says, "accommodative credit policy stance, continuous global liquidity flows, coupled with improved economic sentiment driven by healthier corporate earnings and positive GDP growth forecast has led to the Indian Mutual Fund Industry AUMs crossing historic highs and touching the highest ever Rs 30 lakh crore landmark. Investors are aligning their allocation in debt schemes more towards duration schemes and corporate bond funds to maximise their debt returns, and on the other hand, booking their profits in equity funds owing to surge in equity valuations."
All equity MF categories witnessed outflows with the largecap fund category (-Rs 3,289.18 crore) seeing the highest outflows, followed by multicap (-Rs 2,842.08 crore) and midcap fund (-Rs 1,317.15 crore) categories.
Debt oriented schemes that saw a net inflow of Rs 1.10 lakh crore in October added Rs 44,983.84 crore in November. Barring overnight, liquid, and credit risk funds, all other categories witnessed net inflows, especially the duration funds.
Akhil Chaturvedi, Associate Director & Head of Sales, Motilal Oswal Asset Management Company, says the record redemptions are due to over-heated markets compared to the levels seen in the March post-COVID-led market crash.
"All of these outflows would not have gone completely out of equities as an asset class, but probably moved to direct equities as investors have had some success in the past few months investing directly, some part of this liquidity could have also flown to real estate with renewed interest amongst genuine buyers wanting to own a home at lower interest rates and falling taxes and prices. There could also be investors sitting on cash to deploy once a meaningful correction happens in the near future," he says.
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