MF industry poised to grow at 18 percent during 2019-20, sees over Rs 22,000 cr of outflows in March

Moneycontrol News

The mutual fund industry continued to register outflows for the second consecutive month in March. The 43-player industry reported a total outflow of Rs 22,357 crore in March, compared with Rs 20,083 crore registered in the month of February, according to the 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 51,343 crore as against Rs 24,509 crore in February.

N S Venktaesh, the chief executive officer of AMFI, believes outflows from liquid funds are a normal phenomenon for March. In March 2018, liquid funds reported outflows of Rs 55,000 crore.

Typically, companies and banks withdraw their liquid fund investments as the financial year-end nears.

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Interestingly, flows in to income funds reversed. Last month, this category registered inflows of Rs 13,856 crore as against outflows of Rs 4,214 crore in February.

Venkatesh attributed the reversal of trend in income funds to Monetary Policy Committee’s dovish stance indicating a rate cut.

“MPCs stand of moving towards dovishness and rate cuts happening is usually better for gilt funds and income funds because you get better capital gains,” Venkatesh said.

He also pointed out that investors had started shifting their investments from other funds to income funds.

According to AMFI, inflows in equity funds more than doubled in March. The category witnessed inflows of Rs 11,756 crore as against Rs 5,122 crore worth of inflows in February.

“Mutual Fund Industry, in one of the most difficult and uncertain year, marked with acute market volatility, credit events and border tensions, has done exceedingly well, with overall industry growing by 11 percent and retail by 14 percent,“ the AMFI chief said while commenting on the overall monthly data.

He also said that, with interest rates easing and the impact of credit events almost normalised and macro-economic indicators showing healthy uptrend, the MF industry is poised to grow at a robust 17-18 percent during 2019-20.