Huge outflows from liquid and money market schemes cited as reason

Mutual funds saw investors pulling out a significant amount of money in December, especially from money market schemes, even as the number of folios from retail investors continued to rise.

According to data from the Association of Mutual Funds in India (AMFI), mutual funds saw net outflows of nearly ₹1.37 lakh crore in December, compared to net inflows of ₹1.42 lakh crore in the previous month.

The outflows are primarily attributed to the huge outflows from liquid and money market schemes that typically see outflows at the end of any quarter due to advance tax payment obligations.

In December, such liquid and money market schemes saw outflows totalling nearly ₹1.49 lakh crore. Incidentally, the December outflows were the highest since September that saw outflows of ₹2.30 lakh crore.

Equity inflow

Equity schemes, meanwhile, saw net inflows of ₹5,765 crore in December, but still remained lower than November inflows of ₹7,579 crore in such schemes.

Other exchange traded funds (ETFs), which exclude gold ETFs, were in the limelight in December, registering net inflows of ₹10,878 crore in December, which were significantly higher than the previous month inflows of ₹1,634 crore.

N.S. Venkatesh, CEO, AMFI, attributed the surge in flows in other ETFs to the CPSE ETF that mobilised ₹17,000 crore.

The overall assets under management (AUM) at the end of December was pegged at ₹22.85 lakh crore, lower than the previous month’s ₹24.03 lakh crore.

“Considering the volatility that we saw in December, mutual fund flows have shown reasonable resilience to the vagaries of the market,” Mr. Venkatesh said.

“Due to the market volatility and the political scenario slowly unfolding, people are remaining cautious and not getting into investment mode. Despite that, mutual funds have shown some pockets of excellence.”

Interestingly, the number of folios crossed the eight crore mark for the first time ever in December. The number of folios has risen 21% between December 2017 and December 2018. “Continued upward trend in retail AUM and monthly SIP contributions are the bright spots [in December] and reflect strong adherence to disciplined investment behaviour from the retail investor fraternity, in spite of the market volatility,” he added.