A massive outflow from liquid funds left the mutual fund industry short of Rs 2.3 lakh crore in September, according to the data from the Association of Mutual Funds in India (AMFI).
Going by the data on AMFI, outflows from liquid funds alone totalled Rs 2.11 lakh crore. Liquid funds or money market segment invests in cash assets such as treasury bills, certificates of deposit and commercial paper for a shorter horizon.
Fears of a liquidity crunch following the IL&FS crisis hit the mutual fund industry in September. Cash plans or liquid funds were the worst hit.
MF experts said industry faced huge redemption pressure in September after liquidity in the banking system tightened.
The liquidity crunch was largely attributed to the advance tax payments coupled with default in payments by IL&FS.
NS Venkatesh, Chief Executive Officer at AMFI is confident that liquid fund flows will start coming back once the market stabilises.
In addition, income schemes -- the type of debt mutual funds that deliver a steady income -- have seen a pullout of Rs 32,504 crore. Besides, gold ETFs continued to see a net outflow of Rs 33 crore.
Despite steep fall in equity markets, equity and equity-linked saving scheme (ELSS) saw an infusion of Rs 11,250 crore. Besides, balanced funds witnessed an inflow of Rs 731 crore.
The S&P BSE Sensex lost more than 2,400 points, or 6.2 percent in September — the worst fall in the month of September since 2008. The Sensex had fallen by about 10 percent in September 2008.
Trade war woes, rising global crude oil price, which breached $83 per barrel level, rupee falling to nearly 73 against the US dollar, liquidity concerns in NBFCs, a hike in interest rates by US Fed rate, and rising concerns around weak macros are some of the factors which took a toll on markets.
"Retail investors are becoming matured and are not panicking due to market fall," Venkatesh added.
The AUM of MF industry comprising 41 active players, stood at Rs 22.06 lakh crore at the end of September, as compared to a record Rs 25.20 lakh crore in August-end.
(With inputs from PTI)
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