Net outflow from equity MF continue in Oct; SIP book grows slightly2 min read . Updated: 09 Nov 2020, 06:54 PM IST
- During October, SIP accounts grew to 3.37 crore, leading to a rise in monthly SIP contribution to ₹7,800 crore, compared to ₹7,788.37 crores in previous month
Equity mutual fund schemes continued to see outflow for fourth straight month as redemption pressure sustained while monthly systematic investment plan (SIP) increased slightly. According to Association of Mutual Funds in India (AMFI) data released on Monday, net outflow from equity mutual fund schemes was at ₹3991.01 crore in October.
This compares to an outflow of ₹1,009.01 crore and ₹4,028.83 crore in previous two months. Redemption in these schemes was at ₹20238.98 crore in October higher than ₹17686.19 crore in preceding month.
“The continued rally in equity markets combined with the expectation of volatility around US elections, appear to have led some investors to book profits in equity and move to short term debt funds. Many of them may come back to equity funds if there is a correction," G Pradeepkumar CEO Union AMC said.
During October, SIP accounts grew to 3.37 crore, leading to a rise in monthly SIP contribution to ₹7,800 crore, compared to ₹7,788.37 crores in previous month.
“The number of folios as well as funds mobilized during the month was higher than September, however, at the same time, the redemption amount too shot up. This indicates that while there are a new set of investors who are investing in the markets, existing investors continue to book profit given the surge in the equity markets across segments in the recent times," Himanshu Srivastava, Associate Director – Manager Research, Morningstar India said.
Meanwhile, investors continued to allocate more money to debt fund categories such as corporate bond funds, money market funds and short duration funds all of which saw net inflows more than ₹15,000 crore. Liquid funds on the other hand which usually account for the largest share of debt inflows saw an inflow of ₹19,582.7 crore, not substantially higher than other categories.
"In April, a lot of wealth managers and distributors gave a call asking investors to move out of debt categories investing in credit or duration and into liquid funds because of the initial Covid impact and lockdown. That fear factor is now unwinding and risk appetite is returning.
Liquid funds are giving 4-4.5% yields and that's not enough for many investors. A category like corporate bond or banking and PSU debt will have higher yield without significantly compromising on credit quality. Of course duration risk in such categories is higher," said Santosh Joseph, founder, Germinate Wealth Solutions, a mutual fund distributor.