Equity mutual funds continue to witness net outflow for eighth months in a row as the segment saw a withdrawal of Rs 4,534 crore in February on profit-booking by investors amid sharp market rally.
However, investors put in Rs 1,735 crore from debt mutual funds last month, thanks to the net inflows in liquid, low duration and money market funds. In January, the segment saw a net outflow of Rs 33,409 crore, data from the Association of Mutual Funds in India (Amfi) showed on Tuesday.
Overall, the mutual fund industry witnessed a net outflow of Rs 1,843 crore across all segments during the period under review, compared with Rs 35,586 crore in January.
According to the data, outflow from equity and equity-linked open-ended schemes was at Rs 4,534 crore in February compared to Rs 9,253 crore in January.
FundsIndia Head (Research) Arun Kumar said, "Net equity inflows continue to remain weak as the trend of profit booking continues, given the sharp market rally and near-term volatility. Many investors have also missed out on the sharp equity rally and are waiting for a market correction to enter back." With markets touching all-time highs in February, it provided a good profit-booking opportunity for investors. Moreover, the elevated valuation levels could have also triggered rebalancing of portfolio, said Morningstar India Associate Director-Manager Himanshu Srivastava.
Overall, equity schemes had witnessed an outflow of Rs 10,147 crore in December, Rs 12,917 crore in November, Rs 2,725 crore in October, Rs 734 crore in September, Rs 4,000 crore in August and Rs 2,480 crore in July, which was their first withdrawal in over four years. Prior to this, such schemes had attracted Rs 240.55 crore in June.
MyWealthGrowth.com co-founder Harshad Chetanwala said the mutual fund industry continues to see net outflow in equity funds even in February as redemptions were up by 34 per cent. The fact that stock markets are trading near all-time high at present is playing on the mind of investors who would like to exit from few funds as well as continue to book profits.
Another factor is the high return from their equity funds investment in last one year, which is also tempting investors to redeem partially, he added.
Barring multi-cap, large- and mid-cap and focussed fund categories, all other equity schemes have seen outflow last month.
The newly created flexi cap category saw a maximum outflow of Rs 4,497 crore last month, compared to net outflow of Rs 5,934 crore in January.
The large-cap category was also hit hard in February with a net outflow of Rs 1,280 crore clearly on the back of profit booking by investors.
On the other hand, multi-cap fund received that the highest net inflow of Rs 4,078 crore, which was significantly higher than the net inflow of Rs 2,858 crore in January.
"The investment mandate of multi-cap funds provides investors the benefit to capitalise on the investment opportunities arising in all the three segments of the equity markets - large-, mid- and small-caps.
"With all the three segments performing well, these funds have been attracting investor interest," Morningstar India''s Srivastava said.
Within the debt schemes, liquid funds logged a maximum inflow of Rs 17,306 crore. Besides, low money market funds also saw inflow to the tune of Rs 9,580 crore. However, short-duration funds witnessed an outflow of Rs 10,286 crore, followed by corporate bonds (Rs 6,752 crore).
Apart from debt funds, gold exchange-traded funds (ETFs) witnessed an inflow of Rs 491 crore last month, compared with Rs 625 crore in January.
Despite the outflow from equities, asset under management (AUM) of the mutual fund industry rose to Rs 31.64 lakh crore in February-end from Rs 30.5 lakh crore in January-end.
The AUMs of SIPs as well as retail equity folios are at an all-time high of Rs 4.21 lakh crore and 8.07 crore, respectively, reflective of continued disciplined approach adopted by the retail mutual fund investors. This has aided in overall increase in the industry''s asset base, Amfi Chief Executive Officer N S Venkatesh said.
"The monthly SIP (Systematic Investment Plan) contribution for last month has come down by Rs 495 crore, owing to weekend dawning on end of February, and the shortfall would get accumulated and reflected in March 2021 monthly data," he added.