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MFs registers total outflows of nearly Rs 52,000 crore in September; debt schemes hit the most

Across all scheme categories, liquid funds posted the highest outgo of Rs 65,951 crore during the review period, followed by nearly Rs 5,000 crore outflows each from money market schemes and ultra-short duration funds

September was a month of contrasts for fund houses as outflows in debt schemes rose significantly but slowed down in equity.

Total outflow from the debt category increased a whopping Rs 51,962 crore in September from Rs 3,907 crore in August, according to data from the Association of Mutual Funds in India's (AMFI) website.

Across all scheme categories, liquid funds posted the highest outgo of Rs 65,951 crore during the review period, followed by nearly Rs 5,000 crore outflows each from money market schemes and ultra-short duration funds.

“In September, companies withdraw their investments from liquid funds to meet their quarterly advance tax requirements and banks withdraw for meeting their capital adequacy norms,” NS Venkatesh, Chief Executive at AMFI, explained.

Normally, companies rush to redeem their investments from cash plans every quarter to meet their advance tax payment commitments. Companies pay advance tax in four instalments of 15 percent, 30 percent, 30 percent, and 25 percent on June 15, September 15, December 15, and March 15, respectively.

Credit risk funds registered outflows in September as well. This category registered outflow of Rs 539 crore, marginally lower than the Rs 554 crore outgo posted a month ago.



Equity schemes

Though equity-oriented mutual funds witnessed net outflows for the third month in a row, the pace has slowed down substantially from the previous month. During September, equity-oriented mutual funds witnessed a net outflow of Rs 734.4 crore, sharply lower than the Rs 4,000 crore outflow witnessed in August.

Among specific categories within equity schemes, multi-cap scheme witnessed the highest outflow of Rs 1,143 crore, followed by large-cap funds at Rs 576 crore.

Industry experts attributed the outflows to the recent Securities and Exchange Board of India (SEBI) circular on multi-cap funds.

“While the multi-cap category has been witnessing net outflows since June, SEBI’s recent guideline around the investment mandate for the category could have also contributed towards the net outflow this month,” said Himanshu Srivastava, Associate Director – Manager Research, Morningstar India.

SEBI on September 11 issued a circular which mandated multi-cap funds to allocate at least 25 percent of their portfolios to large-, mid- and smallcaps each by February 2021.

Some industry officials attributed the outflows from equity funds to panic redemptions when market fell. “The 7 percent fall in markets in the third week of September also would have led to reactionary redemptions from some mutual fund investors,” Gautam Kalia, Head Investment Solutions, Sharekhan by BNP Paribas, said.

In September, Sensex fell down over 1 percent.

Overall, net assets under management of the 42-player mutual fund industry fell to Rs 26.85 lakh crore in September from Rs 27.49 lakh crore a month ago.

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