As equity MFs saw outflows of Rs 13k cr in Nov, debt funds got inflows worth Rs 45,000 cr

Kumar Shankar Roy   /   December 9, 2020
Mutual Fund

Equity MF investors seem to be in cashing-out mode. As stock markets hit new life-time highs on a regular basis in November 2020, monthly net outflows occurred in all the 10 equity fund categories totalling Rs 12,917 crore. This is the biggest monthly outflow number registered in equity MFs in many months. Though markets swiftly changed mood after hitting lows in March 2020, flows in equity funds have dried up and have been in the red for five consecutive months (July to November), shows data from mutual fund industry lobby AMFI.

November saw largecap funds witnessing the biggest monthly outflows among the 10 equity fund categories, with a net Rs 3,289 crore flowing out. Largecap funds were followed by multicap funds (-Rs 2842 crore), value/contra funds (- Rs 1,323 crore), midcap funds (-Rs 1,317 crore), smallcap funds (-Rs 1,031 crore). Sectoral thematic funds saw net outflows of Rs 987 crore, followed by ELSS/tax-saving funds (-Rs 804 crore), focussed funds (-Rs 637 crore), large & midcap funds (-Rs 615 crore) and dividend yield funds (-Rs 70 crore).

November 2020 has been one of the better months for equity markets with Nifty 50 at all-time high and a very strong recovery in the mid and small cap indices, with mid and small caps after three years of negative returns turned positive for the CY 2020. The markets are clearly pricing in the positives of recovering economic data points, lower interest rates and sign of vaccine coming out very soon and all of this leading to a very positive impact on earnings in coming quarters and more specifically FY 22, says Akhil Chaturvedi, Associate Director & Head of Sales, Motilal Oswal AMC said.

“Now, optically from the lows of March 2020 correction markets have given some stupendous returns and leading to the belief that markets are over-heated and therefore outflow from equity mutual funds to the extent of Rs 35k cr highest ever seen. Adjusted for inflows of 17k cr (50% of which would be SIP flows) the net redemptions have been almost Rs 18k cr,” estimated Chaturvedi speaking on November AMFI data.  

In the hybrid funds segment, the net outflows in November 2020 is Rs 5,249 crore. Hybrid funds invest in both debt and equities, but the blend changes as per fund type mandate. Balanced hybrid funds were the worst hit, with outflows touching Rs 3,731 crore, which is even bigger than the worst hit on the equity side i.e. largecap funds. Dynamic asset allocation funds saw Rs 734 crore flowing out, followed by Rs 407 crore in equity savings funds, Rs 338 crore in arbitrage funds, Rs 178 crore in multi asset allocation funds. The only hybrid fund category which saw net inflows in November 2020 was conservative hybrid funds at nearly Rs 140 crore.

Meanwhile, debt funds saw net monthly inflows Rs 44,983 crore led by ultra short duration funds, short duration funds and dynamic bond funds.

N S Venkatesh, Chief Executive, AMFI took a different view of things and said: “Investors are aligning their allocation in Debt schemes more towards duration schemes and corporate bond funds to maximize their debt returns, and on the other hand booking their profits in equity funds owing to surge in equity valuations. It is also significant to note that there has been a healthy addition of 3.39 lakh SIP accounts.

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