InvestorQ : How were mutual fund flows in the month of November 2020? Have equity fund flows recovered or are we still seeing outflows?
diksha shah made post

How were mutual fund flows in the month of November 2020? Have equity fund flows recovered or are we still seeing outflows?

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Rutuja Nigam answered.
3 months ago
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The mutual fund industry AUM or assets under management crossed Rs.30 trillion for the first time in history. That is almost a four-fold increase from the AUM in 2014. This accretion in AUM largely came from the rally in the Nifty and the Sensex and partially from inflows into various debt fund schemes.

However, equity funds saw net outflows for the fifth month in succession. The outflows just got more intense in the month of November. For example, in Nov-20 alone, the equity fund outflows were to the tune of Rs.12,917 crore accounting for 57% of the total outflows in the last 5 months out of equity funds.

To an extent, it must be said that the Nifty and Sensex trading at record highs and at steep valuations has stirred this sense of caution among investors. In Nov-20, even the monthly SIP volumes fell sharply to a level of Rs.7302 crore. You would recollect that this figure had been holding around Rs.8000 crore per month for some time now.

Within the gamut of equity funds, it was the large cap funds and the multi-cap funds that saw the biggest outflows. This was followed by mid-cap, small-cap and value funds. The outflows on multi-cap funds were due to the likely shift to flexi cap funds, which a lot of investors are not too comfortable due to too much discretion to fund manager.

Debt funds were much better with net inflows of over Rs.44,500 crore in Nov-20. An interesting trend was that debt fund investors moved out of liquid funds and were buying heavily into short duration and medium duration funds. They were taking on more risk to leverage the accommodative stance of the RBI monetary policy.

Among the hybrid and passive funds, the equity oriented aggressive hybrid accounted for bulk of the outflows. For a change, gold funds saw outflows due to the sharp correction in the price of gold in November. Even arbitrage funds saw outflows after the arbitrage spreads got badly squeezed due to the sharp fall in bond yields.

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