The 44-player mutual fund industry witnessed a net outflow of Rs 2,270 crore from credit risk funds in August, the highest among all categories and which was also its fifth consecutive month of outflows.
But the data also threw up a silver lining. Outflows fell from July, when the segment saw investors pull out Rs 3,411 crore, according to data released by the Association of Mutual Funds in India (AMFI).
"Credit funds continue to suffer on the back of the NBFC crisis. Fear of any additional defaults are keeping investors away and most are pulling out," said head of fixed income at a private fund house.
The back-to-back downgrade of debt instruments from Infrastructure Leasing & Financial Services (IL&FS), Dewan Housing Finance (DHFL), and Reliance Home Finance by rating agencies have hurt the performance of credit risk funds.
Since April, AMFI has followed a new format to release data, as mandated by market regulator SEBI. The format requires categorisation of schemes into various segments: open-ended, close-ended and equity-oriented schemes.
Under income/debt-oriented schemes, another category that saw a significant drop was medium-duration funds, which registered outflows of Rs 561 crore last month as against outflows of Rs 956 crore in July.
In the same category, liquid funds, which are used by companies to park surplus cash, saw robust inflows of Rs 79,428 crore in August as against inflows of Rs 45,441 lakh crore in July.
Inflows in balanced funds category reversed in August, with outflows of Rs 879 crore as against inflows of Rs 674 crore in July.
On the equity front, despite volatility in the equity markets, funds saw inflows of Rs 9,090 crore in August, up 12.3 percent month-on-month. The Sensex closed a volatile August down 0.5 percent.
Commenting on the monthly numbers, N S Venkatesh, Chief Executive, AMFI said: “Retail Investor Interest in Equity Mutual Funds, for the 4th time in succession, continues to be steady, displaying maturity, despite uncertain economic and volatile market situation.”
“Net inflows, largely in all categories of Equity funds, especially in small and mid-cap funds, as also in ELSS segment, signifies heightened confidence and interest in emerging businesses and disciplined tax planning,” he added.
On the outlook for September 2019, Venkatesh said: “On the equity side, SIPs would continue to witness robust flows and on Debt side, liquid funds may see volatility owing to quarter-end phenomenon.”
SIP inflows in August stood at
Rs 8230.76 crore, marginally down from Rs 8324.28 crore in July
SIP AUM stood at Rs 2,71,104.77 crore as on August 2019 as against
Rs 2,68,863.92 crore as on July 2019.
Overall, the industry (debt + equity) witnessed inflows of Rs 102,538 crore in August as against Rs 87,087.71 crore in July, with assets under management of Rs 25.47 lakh crore, up from Rs 24.53 lakh crore month-on-month.
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