InvestorQ : Why is there still so much redemption pressure on equity funds in the market as per AMFI data?
Sam Eswaran made post

Why is there still so much redemption pressure on equity funds in the market as per AMFI data?

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Moii Chavate answered.
2 months ago
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For the month of Dec-20, the equity funds saw net redemptions of over Rs.10,000 crore. This is less than November but what matters is that December has been the sixth consecutive month of net outflow from equity funds in the Indian context. A total of Rs.33,000 crore has been redeemed from equity funds since July 2020.

Even as equity funds saw net redemptions for six months in succession, the large cap funds especially have come under a lot of redemption pressure and the reasons are perfectly acceptable. What really stood out are the gross ratios. For the large cap funds, the ratio of gross purchases to gross sales has moved up from 0.45 in Mid-2019 to 1.65 by late 2020.

One reason has been that MF investors have looked to book profits at higher levels. However, the bigger reason is that due to portfolio exposure restrictions for large cap funds, most of them have underperformed the benchmark indices in 2020. This is more acute because normally it is one or two companies that drive the indices but the mutual funds are constrained by their 10% ruled imposed by SEBI on individual stock holdings.

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