Negative inflows in Equity mutual funds, for first time in over four years

Published: August 10, 2020

Equity mutual funds have witnessed net outflows for the first time in the last four years, from the country, as per the data released by the AMFI, the industry body. This is something normal since investors mainly sat on cash during the corona-induced pandemic situation across the world.

Data in Detail

The equity mutual funds saw an outflow of Rs 2480 crores in July for the first time in over four years. Last time it saw net redemptions were in March 2016. Then the outflow was Rs 1370 crores. 8 out of 10 equity-oriented mutual fund categories have seen outflows in July 2020. Midcap funds fared the worst during this period.

SIP Story

The SIP inflow was also muted during this period as the inflow via SIP during the month were Rs 7830.66 crores against Rs 7917 crores, in June. SIP category slump is something to be concerned about regarding the long-term health of the market.

Debt Mutual Funds & Hybrid Schemes

They experienced a huge jump in net outflows in July and the amount was Rs 91392 crores as against the net inflows of Rs 2862 Cr in June. This is due to the investments in liquid funds, overnight funds and corporate bond funds.

Hybrid schemes also saw negative inflows of over Rs 7300 crores in July. All the hybrid schemes have seen net outflows in this month. Arbitrage funds also saw net outflows of Rs 3732 crores.

As on July 31, the total Asset under Management (AUM) of the mutual funds industry stands at Rs 27.12 lakh crores against Rs 25.48 lakh crore in June.

What are Equity Mutual Fund, Debt Mutual Fund, Hybrid Fund and SIP?

Equity mutual funds invest in the shares of different companies. The fund manager diversifies his portfolio among various sectors of various companies.

Debt Mutual Fund is known as that type of fund which invests in the bonds and other fixed-income securities in order to generate returns. As this is safer, the inflow in this type of funds increased manifold during the month of July.

Hybrid Fund is defined as a fund that invests in more than one asset classes. Typically these funds invest in a mix of stocks and bonds.

Systematic Investment Plan (SIP) is defined as that kind of scheme that puts in a fixed sum of money into the mutual funds on a monthly basis.

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