Equity MFs log Rs 10,147 cr outflow in Dec, industry asset base surpasses Rs 31 lakh cr-mark

Within the debt segment, corporate bond funds attracted Rs 8,610 crore, followed by overnight funds (Rs 7,410 crore) and liquid funds (Rs 5,102 crore). (Photo: AFP)


Equity mutual funds witnessed a massive outflow of Rs 10,147 crore in December, making it the sixth consecutive monthly withdrawal, even as the industry’s asset base surged to an all-time high of over Rs 31 lakh crore.

However, investors put in Rs 13,863 crore in debt mutual funds last month as compared to Rs 44,984 crore in November, data from the Association of Mutual Funds in India (Amfi) showed on Friday.

Overall, the mutual fund industry witnessed a net inflow of Rs 2,968 crore across all the segments during the period under review, much lower than Rs 27,194 crore inflow seen in November.

The assets under management (AUM) of the mutual fund industry rose to an all-time high of Rs 31.02 lakh crore in December-end from Rs 30 lakh crore in November-end on inflow from debt funds.

“The industry AUM at an all-time high, increase in retail folios and also SIP folios is reflective of investor confidence in mutual fund asset class,” Amfi CEO N S Venkatesh said.

As per the data, outflow from equity and equity-linked open ended schemes was at Rs 10,147 crore in December as compared to Rs 12,917 crore in November.

The equity schemes had witnessed an outflow of 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.

Since July, equity oriented mutual funds have witnessed a net outflow of over Rs 33,000 crore.

Incessant selling by mutual funds due to redemption by investors comes on the back of good performance by stock market over the last nine months since the lows of March 2020.

With Nifty 50 index delivering returns of 3.5 per cent in October, 11.4 per cent in November and 7.8 per cent in December, mutual fund investors are indulging in continuous profit booking to shore up their substantial gains, said Gopal Kavalireddi, Head of Research at FYERS.

Himanshu Srivastava, Associate Director Manager Research of Morningstar India, said, “The continuation of net outflows from equity funds could be attributed to profit booking/portfolio rebalancing as markets continue to touch new highs.

“Infact, the net outflow number would have been higher had it not been for the new fund offers (NFOs) across multiple equity categories which collected Rs 7,600 crore,” Srivastava added.

Barring dividend yield and thematic funds, all the equity schemes saw outflows last month. Large cap and multi cap categories were the worst hit during the month, together witnessing a net outflow of Rs 7,417 crore in December.

Similarly, hybrid funds saw an outflow of Rs 5,932 crore during December. The outflow for the category stood at Rs 5,249 crore in November.

“While net inflows in equity funds and hybrid are indeed negative, on the back of profit-led redemptions, the gross inflows are a healthy Rs 36,000 crore in these two categories,” Venkatesh said.

The equity and hybrid numbers indicate that many retail investors, after booking profits in October and November, have started putting money back in equities, said Gautam Kalia, Head Investment Solutions at Sharekhan by BNP Paribas.

The trend may likely continue in 2021 as investors start considering the historically high index levels as the new normal and continue putting more money in equities, he added.

Gold exchange traded funds (ETFs) witnessed an inflow of Rs 431 crore last month. This comes following a pull out of Rs 141 crore in November, which was the first outflow since March when safe haven assets had seen outflow of Rs 195 crore.

Within the debt segment, corporate bond funds attracted Rs 8,610 crore, followed by overnight funds (Rs 7,410 crore) and liquid funds (Rs 5,102 crore).

“On the debt side, I expect RBI to continue maintaining accommodative stance and keep rates at current levels for economy to play a catch up, which is reflected in positive flows in corporate bond funds owing to the schemes holding quality paper and also shorter duration strategies including floater and dynamic bond schemes,” Venkatesh added.