Equity funds see outflows for 8th straight month in Feb

Investors pulled money out of equity mutual funds in February for the eighth straight month, as they remained sceptical about the market’s prospects at near-record level after the sharp run-up. Debt mutual funds too witnessed outflows as the rise in bond yields eroded investor returns.

Equity schemes saw outflows to the tune of Rs4534 crore in February. In January, this category witnessed outflow of Rs9253 crore.

“The trend is similar to the previous month where investors are booking profits or reallocating to alternate investment avenues like real estate, direct equity or IPOs,” said Akhil Chaturvedi, Head (Sales and Distribution), Motilal Oswal AMC.

Among equity mutual fund categories, large cap funds saw outflows of Rs 1280 crore followed by midcaps at Rs 99 crore and small cap at Rs 451 crore. Tax-saving ELSS schemes saw outflows of Rs 847 crore.

Investors have withdrawn a total of Rs 46,790 crore out of equity mutual funds in the past eight months. Collections through Systematic Investment Plans (SIPs) fell in February to Rs 7528 crore as against Rs 8023 crore in January.

The industry’s total Assets Under Management (AUM) rose to Rs 32.30 lakh crore compared to Rs 31.84 lakh crore in the previous month thanks to flows into liquid schemes.

Though several debt fund categories saw outflows, overall flows were positive primarily due to liquid funds seeing inflows of Rs 17,302 crore.

Balanced advantage funds that invest in a mix of debt, equity and arbitrage based on market valuations saw inflows of Rs 2005 crore.

“Investors who missed out on the equity rally could be coming back through a balanced advantage funds,” says Anand Varadarajan, Business Head, Tata Mutual Fund.

Other hybrid mutual funds that invest in a mix of debt and equity saw outflows of Rs 2334 crore. As yields moved up, arbitrage funds saw inflows of Rs 5033 crore.

Among fixed income products, corporate bond funds saw inflows of Rs 6751 crore, short duration funds saw outflows of Rs10,286 crore, gilt funds saw outflows of Rs 1589 crore and credit risk funds saw outflows of Rs 829 crore as investors preferred to stick to bank deposits amidst rising yields.

Gold ETFs saw inflows of Rs 491 crore as investors allocated to the yellow metal after the sharp fall in prices over the last six months.