Outflows from equity schemes of mutual funds (MFs) touched a record ₹12,917 crore in November against ₹2,725 crore in October, with investors booking profit in all categories as the market scaled new highs.
This is the fifth consecutive month of net outflows from equity funds. Almost all categories of equity funds saw outflows, with large-cap funds registering the highest outflow of ₹3,289 crore, followed by multi-cap and contra fund outflows at ₹2,842 crore and ₹1,323 crore, respectively, said the Association of Mutual Funds in India (AMFI).
DP Singh, Chief Business Officer, SBI Mutual Fund, said as the markets continue to touch all-time highs, investors are wary of allocating more money towards equity as an asset class. “While this is a sign of maturity, historically, we have seen investors flocking towards equities in an upward trending market and redeeming during market correction,” he said.
At the current juncture, it is advisable for existing investors to continue investing in a disciplined manner and for new investors to start investing in a staggered manner, he added.
Hybrid funds also recorded outflows of ₹5,249 crore last month against ₹1,682 crore recorded in October.
Despite high redemption, equity assets under management were up 13 per cent last month at ₹8.57-lakh crore against ₹7.77-lakh crore on account of a gain in the value of assets held. Hybrid AUM increased 5 per cent to ₹3.10-lakh crore.
Inflows via SIPs
Inflows through systematic investment plans (SIP) fell to ₹7,302 crore in November from ₹7,799 crore in October. Assets under SIP increased to ₹3.78-lakh crore (₹3.42-lakh crore).
NS Venkatesh, CEO, AMFI, said the last three days of November were non-transaction days and new SIPs worth ₹500-525 crore registered on those days will now be accounted in December. Though profit-booking in equity funds may continue as investors use their savings to meet emergency expenditures triggered by the Covid pandemic, the event will prove that equity saving is the best way to build wealth in the long term, he added.
Kaustubh Belapurkar, Director, Morningstar India, said equity-oriented MFs have witnessed a net outflow of ₹22,500 crore since July as investors looked to book some profit given the high market valuations.
Overall AUM at new high
The overall asset under management of MFs gained 6 per cent to hit a new high of ₹30-lakh crore against ₹28.23-lakh crore on market gains in equity and net inflow of ₹44,983 crore in debt funds.
G Pradeepkumar, CEO, Union AMC, said the strong performance of the equity markets last month encouraged many investors to book profit and move to short-term investments, with hopes to reinvest in equity in the event of any correction.