MFs see over Rs 20,000cr in outflows in Feb led by liquid funds; equity inflows dwindle

Fund flows into mutual funds reversed in February, with outflows at Rs 20,083 crore, after the 43-player industry witnessed net inflows of Rs 65,439 crore in January, according to data from the Association of Mutual Funds in India (AMFI).

Cash plans, or liquid schemes, reported the highest outflows across all MF categories. This category registered outflows of over Rs 24,509 crore in February as against an inflow of Rs 58,637 crore in January.

Companies normally park their money in liquid schemes to meet their short-term needs instead of keeping their money idle in a non-interest bearing current account. Since liquid plans do not levy any entry or exit fee, they facilitate easy cash management.

Income funds too saw outflows of Rs 4,214 crore in February. Debt fund investors are still shying away from making investments after the recent crisis at IL&FS affected these schemes.

The trouble, which began after multiple defaults by Infrastructure Leasing & Financial Services (IL&FS) came to light a few months back, impacted debt funds that held securities issued by it, worth Rs 2,800 crore.

For the second consecutive month, balanced funds saw net outflows of Rs 1,077 crore in February, after outflows of Rs 952 crore in January

Equity funds continued their downward journey for the fourth straight month, with the quantum of inflows declining 16.9 percent month-on-month to Rs 5,122 crore in February.

Commenting on February monthly data, NS Venkatesh, CEO, AMFI, said: “Amid global uncertainty, tension along the Pakistan border, liquidity tightness and credit events, it is heartening to see retail investor continuing to stay invested. The continued healthy confidence that retail investors are showing, as reflected in the rising number of SIP (Systematic Investment Plans) inflows, is laudable. The patience to stay invested, amid uncertainty, will help from an individual long-term wealth creation perspective. Once political uncertainty and liquidity tightness recedes over the next few months, we  expect inflows in both equity and liquid funds to strengthen further."