Out of 16 debt categories, 12 of them witnessed net outflows during the month under review. The major quantum of net outflows was witnessed by categories such as liquid, money market and ultra short duration funds.
According to data with the Association of Mutual Funds in India (Amfi), debt mutual funds (MFs) witnessed an outflow of ₹1.02 lakh crore in September, way higher than a net outflow of ₹7,980 crore in the preceding month.
In July, debt MFs saw a significant inflow of ₹1.07 lakh crore.
Nehal Meshram, Senior Analyst – Manager Research, Morningstar Investment Research India, said the higher outflow in September was primarily led by “large institutional withdrawals from liquid and money market funds, reflecting quarter-end liquidity adjustments and advance tax-related outflows. These categories often used by corporates and institutions for short-term cash management remain highly sensitive to seasonal liquidity cycles.” The huge outflow has pulled down the assets under management (AUM) of fixed income funds or debt funds by nearly 5% to ₹17.8 lakh crore at the end of September from ₹18.71 lakh crore in the preceding month-end.
Of the debt categories, liquid fund category witnessed the steepest outflow of ₹66,042 crore and similarly, money market funds saw significant redemptions of ₹17,900 crore. Further, ultra-short duration funds witnessed outflow of ₹13,606 crore, while low-duration funds also saw net redemptions of ₹1,253 crore.
In comparison, short-duration funds experienced modest outflows of ₹2,173 crore, indicating a more measured response within accrual-oriented categories. “These modest outflows suggest that investors remained broadly anchored to shorter-tenor accrual-oriented products, even as overall liquidity tightened toward quarter-end,” Meshram added.
In contrast, overnight funds registered modest positive inflows of ₹4,279 crore, as few investors temporarily parked money in these instruments amid broader redemptions elsewhere.
Also, the dynamic bond category saw modest inflows of ₹519 crore, followed by medium to long duration fund (₹103 crore) and long duration fund (₹61 crore).
On the other hand, equity MFs saw inflows of ₹30,421 crore in September, marking a 9% drop from ₹33,430 crore in August and well below July’s all-time high of ₹42,703 crore. This came as investors turned cautious amid market volatility and global uncertainties.