Equity mutual funds in India faced their monthly net outflows in July, first time in more than two years as investors continue to cash out and redeem their units.
Equity and equity-linked schemes witnessed an outflow of Rs 2,480 crore in July compared with an inflow of Rs 241 crore in the previous month (June), according to data released by the Association of Mutual Funds in India (AMFI). Net investments into such schemes have been declining for the last three months.
The outflows come despite a 7.5% jump in the Nifty 50 Index in July. The Index has increased to the tune of 40% from the March lows.
“The uncertainty about the coming times and on-ground reality related to salary cuts, job loss along with profit-booking and some loss of confidence continue to weigh on domestic equity funds,” said Prableen Bajpai, founder of FinFix. “Nine out of the 10 equity fund categories witnessed net outflows compared to four in June. But international funds, reported separately, witnessed net inflows, which were double vis-à-vis June figures Bajpai said. “Although this segment has a small AUM, the trend does indicate that investors are somewhere looking to diversify into global markets, especially the U.S., with recency bias playing a part.”
According to Swarup Mohanty, chief executive officer and chief investment officer at Mirae Global Investment (India), majority of growth on the equity side happened during 2015-2017. Investors, according to him, would have come in with a long-term perspective but very few would have anticipated the kind of turmoil seen in March. “And we’re seeing this complete one-way flight to safety. It’s not the first time that this has happened in the industry, we’ve seen situations like this.” All segments witnessed an outflow in July. While investors pulled out from large- and multi-cap schemes for the second straight month, mid and small caps witnessed their first ever outflow since AMFI started releasing granular data in April 2019.
Contribution through Systematic Investment Plans (SIP) remained below Rs 8,000 crore for the second straight month. Net investments into such schemes stood at Rs 7,831 crore in July compared with Rs 7,927.11 crore in June.
Total Assets under Management (AUM) rose 5% month-on-month to Rs 27.28 lakh crore in July. Total equity assets increased 6% to Rs 7.29 lakh crore in July due to the steep recovery in the Index.
AMFI reports a 95% fall in net inflows in the month of June. Read here.
