Equity MFs see outflow for 8th straight month in February on profit-booking

New Delhi: Equity mutual funds continue to witness net outflow for eighth months in a row as the segment saw a withdrawal of Rs 10,468 crore in February on profit-booking by investors amid sharp market rally. However, investors put in Rs 1,735 crore from debt mutual funds last month, thanks to the net inflows in liquid, low duration and money market funds. In January, the segment saw a net outflow of Rs 33,409 crore, data from the Association of Mutual Funds in India (Amfi) showed on Tuesday.

Overall, the mutual fund industry witnessed a net outflow of Rs 1,843 crore across all segments during the period under review, compared with Rs 35,586 crore in January.

According to the data, outflow from equity and equity-linked open-ended schemes was at Rs 10,468 crore in February compared to Rs 9,253 crore in January. FundsIndia Head (Research) Arun Kumar said, "Net equity inflows continue to remain weak as the trend of profit booking continues, given the sharp market rally and near-term volatility. Many investors have also missed out on the sharp equity rally and are waiting for a market correction to enter back."

With markets touching all-time highs in February, it provided a good profit-booking opportunity for investors. Moreover, the elevated valuation levels could have also triggered rebalancing of portfolio, said Morningstar India Associate Director-Manager Himanshu Srivastava. Overall, equity schemes had witnessed an outflow of Rs 10,147 crore in December, Rs 12,917 crore in November, Rs 2,725 crore in October, Rs 734 crore in September, Rs 4,000 crore in August and Rs 2,480 crore in July, which was their first withdrawal in over four years. Prior to this, such schemes had attracted Rs 240.55 crore in June.

MyWealthGrowth.com co-founder Harshad Chetanwala said the mutual fund industry continues to see net outflow in equity funds even in February as redemptions were up by 34 per cent. The fact that stock markets are trading near all-time high at present is playing on the mind of investors who would like to exit from few funds as well as continue to book profits.

Another factor is the high return from their equity funds investment in last one year, which is also tempting investors to redeem partially, he added.

Barring multi-cap, large- and mid-cap and focussed fund categories, all other equity schemes have seen outflow last month.

The newly created flexi cap category saw a maximum outflow of Rs 10,431 crore last month, which was sharply higher than the net outflow of Rs 5,934 crore in January.

The large-cap category was also hit hard in February with a net outflow of Rs 1,280 crore clearly on the back of profit booking by investors.

On the other hand, multi-cap fund received that the highest net inflow of Rs 4,078 crore, which was significantly higher than the net inflow of Rs 2,858 crore in January.