Investors cautious on debt mutual funds
Outflows at Rs 25,872 cr in Aug as 9 out of 16 debt categories recorded offloading by investors
Alarming Bells
♦ Banking and PSU schemes most sufferers
♦ Debt MFs witnessed net inflow of Rs61,440 cr in July
♦ AUM of debt funds to Rs14 lakh cr in Aug from Rs14.17 lakh cr in July
After witnessing staggering inflow in July, debt-oriented mutual fund (MF) schemes saw a withdrawal of Rs25,872 crore in August as investors continue to adopt a cautious stance amid the current interest rate scenario in the US.
Out of 16 debt categories, nine of them witnessed net outflows during the month under review, data with the Association of Mutual Funds in India (Amfi) showed. The major quantum of net outflows was witnessed by the categories having less than one year duration profile such as liquid, ultra short and low duration.
Additionally, the banking and PSU category also witnessed significant net outflows. According to the data, debt mutual funds witnessed an outflow of Rs 25,872 crore in August as compared to a net inflow of Rs61,440 crore in the preceding month.
“Given the current interest rate scenario and uncertainty over the direction of interest rates in the country, it appears that many investors continue to adopt a cautious stance and wait for further indication on interest rates to make investment decisions. Also, a rally in the equity markets could have also prompted investors to shift their focus from debt to equity,” said Melvyn Santarita, analyst (manager research) at Morningstar India.
The huge outflow has pulled down the assets under management (AUM) of fixed income funds or debt funds to Rs14 lakh crore at the end of August from Rs14.17 lakh crore in the preceding month-end. In terms of categories, liquid funds saw an outflow of Rs26,824 crore, followed by ultra short duration funds (Rs4,123 crore) and banking and PSU funds (Rs985 crore.) On the other hand, there was another section of investors who chose to take some risk.
