Mutual funds witnessed an outflow of ₹43,143 crore in September, compared to an inflow of ₹52,443 crore in August, marking the first time this fiscal year that the total flow has turned negative, according to data from the Association of Mutual Funds in India released on Friday.
The total net assets under management (AUM) of mutual funds rose to ₹75.61 lakh crore in September, a 0.53% sequential increase. Equity AUMs reached ₹33.7 lakh crore, a 1.81% rise.
Equity mutual funds have witnessed buoyant investor interest, with inflows of ₹30,422 crore in September, 9% lower than in August. “Equity numbers continue to remain fairly strong despite the Nifty being flat over the past year. It is heartening to note that primary market activity was robust in September with several IPOs, while equity flows also remained strong in the secondary markets,” said Anand Vardarajan, chief business officer, Tata Asset Management.
According to Vardarajan, precious metals, particularly gold and silver, have performed very well in the last couple of months. Flows into gold nearly quadrupled in September, rising from about ₹2,000 crore in August to around ₹8,300 crore. This surge was largely driven by strong performance as well as investors seeking safety and diversification. Similarly, multi-asset funds experienced strong inflows within the hybrid category.
Debt funds, on the other hand, have experienced sharp outflows of ₹1.02 lakh crore. In August, the outflows were ₹7,979 crore, whereas July saw an inflow of ₹1.07 lakh crore. “Debt funds turned negative primarily due to quarter-end liquidity requirements. Festive season spending may also have contributed to the weak/negative flows in this segment,” averred Vardarajan.
According to Naval Kagalwala, COO & Head of Products, Shriram Wealth, most major debt categories (non-liquid) have seen outflows, including Corporate Bonds, PSU debt, Floater, Gilt, and Short Duration, possibly due to the recent rate cuts and lower return expectations going forward. “Gold and Other ETFs (including Silver) have witnessed the highest net inflows (to the tune of ₹16000 crore) across all mutual fund categories. This seems to be driven by the significant rally in gold and silver prices YTD, reflecting a FOMO effect amongst retail investors. With equity funds, Flexi-cap funds continue to receive strong flows. Flows into Small & Midcap funds remain strong despite the negative returns over the past year.“