Most equity and debt scheme categories saw outflows last month.
The total outflow from the equity scheme category increased to Rs 4,000 in August compared with Rs 2,480 crore registered a month ago, according to the data on the Association of Mutual Funds in India's (AMFI) website.
Among specific categories within equity schemes, large cap schemes witnessed the highest outflows to the tune of Rs 1,553 crore, followed by multi-cap fund that posted outflows of Rs 1,1571 crore.
Industry attributed the outflows to profit booking after the headline indices went up by almost 3 percent in August.
The Indian market continued to rise for the third consecutive month in August backed by better-than-expected corporate earnings, strong FII flow. Hopes of a quick economic turnaround, as well as positive developments on the COVID-19 vaccine front, also aided the sentiment.
In August, benchmark indices Nifty and Sensex rose 2.84 percent and 2.72 percent, respectively,
“Over the last two or three months, investors have continued to book profits from equity mutual funds, said G. Pradeepkumar, Chief Executive Officer, Union AMC.
Within the equity segment, all categories barring, ELSS (equity-linked savings scheme), focused scheme, and sectoral/thematic funds, registered outflows.
"Despite persistent volatility and challenging economic scenario, Retail Investors continue to exhibit mature investment behavior, " said NS Venkatesh, Chief Executive, AMFI.
On the debt front, the liquid funds category was the worst hit, across all categories. Liquid funds which are used by corporates to park surplus cash registered outflows of Rs 15,814 crore in August.
Overnight funds registered outflows of Rs 10,298 crore in August. Overnight funds invest their assets in CBLO (collateralised borrowing and lending obligations) and repo/reverse repo instruments that mature in one day, while liquid funds invest in treasury bills, commercial paper, and certificate of deposit that have a maturity of up to 91 days.
Liquid funds and overnight funds have delivered low returns. Investors shifted their preference to ultra-short term and low duration debt funds. Fixed-income investors with a bit longer time frame opted for investments in corporate bond, banking & PSU debt, and short-term bond funds.
The inflows put together in all these five categories-- ultra-short term and low duration debt funds, corporate bond, banking & PSU debt, and short-term bond funds, stood at Rs 13,000 crore.
Liquid funds and overnight funds have delivered merely 0.2 percent returns last month, while other categories have delivered marginally higher returns.
Total outflows in debt funds stood at almost Rs 9,000 in August.
Hybrid Schemes, ETFs
Hybrid schemes too witnessed significant net outflows, with investors viewing this scenario as a good exit opportunity. Balanced Hybrid Fund/Aggressive Hybrid Fund, whose mandate is to invest between 65-80% of assets in equities, witnessed a net outflow of Rs 2,355 crore in August. Otherwise too, this category has been witnessing consistent net outflow for a long time, given the challenging scenario in both equity and debt markets earlier.
The other ETF segment continued to get investor traction as the category received a net inflow of Rs 1,721 crore in August.
“The category has been consistently receiving net inflows. New ETFs are also being launched. With many actively managed funds struggling to outperform the benchmark indexes, investors have seemingly turned their focus towards ETFs,” said Himanshu Srivastava, Associate Director - Manager Research, Morningstar India.
Overall, the industry registered outflow of Rs 14,000 crore. However, AUM increased marginally last month. Total assets under management (AUM) stood at Rs 27.7 lakh crore in August, as against Rs 27.2 lakh crore in July.