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Equity MFs see first outflow in over 4 yrs in July on profit-booking

New Delhi: Equity mutual funds witnessed an outflow of Rs 2,480 crore in July, making it the first withdrawal in more than four years, primarily on profit-booking by investors.

Overall, the mutual fund industry witnessed a net inflow of Rs 89,813 crore across all segments last month, much higher than Rs 7,265 crore seen in June, data by Association of Mutual Funds in India (Amfi) showed on Monday.

This inflow could be attributed to infusion in liquid funds and low duration funds.

As per the data, outflow from equity and equity-linked open ended schemes was at Rs 2,480.35 crore in July as compared to an inflow of Rs 240.55 crore in June.

Such schemes had attracted Rs 5,256 crore in May, Rs 6,213 crore in April, Rs 11,723 crore in March, Rs 10,796 crore in February and Rs 7,877 crore in January.

July 2020 saw the first outflow since March 2016, when equity schemes witnessed a pull out of Rs 1,370 crore.

In July this year, except for equity linked saving schemes (ELSS) and focused fund categories, all the other equity categories witnessed net outflow.

Amfi Chief Executive N S Venkatesh attributed the outflow from equity-oriented funds to withdrawal from multi-cap and large cap funds due to profit-booking by investors.

"Equity-oriented mutual funds witnessed their first major monthly net outflow in a long time. Multi-cap fund category was the worst hit followed by mid-cap and value fund categories, said Himanshu Srivastava, Associate Director- Manager Research at Morningstar India.

This could be largely attributed to investors booking profit given the surge in the equity markets, across market segments, in the recent times, he added.

Groww Co-founder and COO Harsh Jain said, booking profits and exiting after a sharp fall in equity markets is a common behaviour among retail investors. Though, the number of more mature investors who stick through ups and downs using SIPs is also steadily rising".

Multi-cap, midcap, value fund and multi-cap saw outflows to the tune of Rs 1,033 crore, Rs 579 crore, Rs 549 crore and Rs 365 crore, respectively, during the month under review.

However, focussed funds attracted Rs 535 crore, while the same for ELSS was Rs 279 crore.

Apart from equity funds, overall hybrid funds saw an outflow of Rs 7,301 crore.

With equity markets doing well and stable scenario in the fixed income markets, hybrid schemes too witnessed significant net outflows, with viewing this scenario as a good exit opportunity, Srivastava said.

Within the hybrid schemes, balanced hybrid or aggressive hybrid fund, whose mandate is to invest between 65-80 per cent of assets in equities, witnessed a net outflow of Rs 2,196 crore in July."This category has been witnessing consistent net outflow for a long time, given the challenging scenario in both equity and debt markets earlier," he added.

Fixed income securities or debt funds saw an inflow of Rs 91,392 crore last month compared to Rs 2,862 crore

in June.

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