Is it true that equity fund and other mutual fund collections have fallen in the month of September? Does it mean that flows are reversing?

You must remember that mutual funds have seen inflows continuously for over 5 years now; month after month. Some amount of rationalization is normal and there is nothing to worry about. Let us quickly look at the September mutual funds flow data put out by AMFI.

· The good news is that SIP flows are not yet disrupted and that has remained flat at Rs. 8,262 crore in September. This is good news for two reasons. Firstly, the long term SIP investors are still sticking on. Secondly, these are equity and ELSS flows and that means the long term retail investors are still sold on to equity as a concept.

· After a long time, the AUM of the mutual funds industry saw a decline of Rs 96,000 crore in September. The overall AUM has fallen from Rs.25.45 trillion to Rs.24.50 trillion. However, the number of folios is still marginally higher indicating that most of the selling happened on the non-equity front.

· Liquid funds saw a net outflow of Rs.1.40 trillion which is understandable around the end of the September quarter. There are tax and statutory payments which necessitate this.

· Finally, while the FMPs and credit risk funds continued to remain under pressure, equity oriented funds saw a net inflow of Rs 6,609 crore in September. This almost 30% lower than the August number and could be largely attributed to the volatility in the stock markets.

September MF flows indicate that there is surely pressure on an absolute basis, but not much to worry at an overall level.