Nothing is certain but death and taxes. The same certainty is working with equity mutual fund redemptions. Equity diversified funds witnessed the largest ever net outflow of Rs 7,011 crore in a single month this September. This was 2.5 times the net outflow seen in August.
Heavy redemptions were triggered on profit booking as the equity market rally witnessed Sensex and Nifty jump 10.2 per cent. With many funds reaching new NAV highs, investors chased on their holdings.
The exit was not restricted to equity funds alone as balanced funds also saw a net outflow of Rs 414 crore compared to net inflow of Rs 398 crore in August. The retail only tax saving funds reported a net outflow of Rs 270 crore during the month.
On the positive side, gross inflows into equity diversified funds during the month were the highest since April this year. Gross inflows during the month were Rs 5,793 crore compared with Rs 4,928 crore in August, a jump of 18 per cent. There were also 3 NFOs that collectively mopped up Rs 677 crore.
Milind Barve, chief executive officer, HDFC Mutual Fund, said gross inflows are good, if the markets consolidate at current levels and redemptions come down, these figures (net inflow and outflow) would change drastically.
Overall the industry witnessed net outflows of Rs 72,000 crore due to large redemptions in debt funds. These redemptions are largely made by institutional players who need the money to pay advance taxes.
The month-end asset under management dropped from Rs 7,09,666 crore in August to Rs 6,57,313 crore. It was not a month of only outflows; Gold and other ETFs saw a net inflow of Rs 250 crore.
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