MF inflows tumble 81% in Q2

Industry experts attributed the huge net outflow in Sept qtr under review to the advance tax requirement that corporates need to meet with it being quarter end. Further, the allocation category witnessed a net inflow of Rs48,153 crore in the quarter, lower than Rs14,021 crore it received in the previous quarter

Volatile Mkts

• Fixed-income or debt segment witnessed net outflows
• Net inflows at Rs82,467 cr in July
• Net inflows at Rs16,180 cr in Aug
• Net inflows at Rs63,882 cr in Sept
• AUM of MF industry rose 5% to Rs46.22 lakh cr in Sept

New Delhi: The mutual fund (MF) industry continued with the positive momentum in the September quarter, attracting Rs34,765 crore, although it was a massive reduction of 81.02 per cent as against the Rs1.85 lakh crore inflow in the preceding quarter, primarily due to withdrawal from debt segment.

Most of the asset classes saw net inflows during the July-September period of the current financial year barring the fixed-income or debt segment, which witnessed net outflows. Overall, flows started on a strong note during the quarter under review, with net inflows of Rs82,467 crore in July, which dipped to Rs16,180 crore in August and ended with a disappointing Rs63,882 crore of net outflows in September, according to a report by Morningstar India.

“Net flows over the last few years over each quarter have been patchy. The flows seen in the June quarter were the highest in four years,” it noted.

The assets under management (AUM) of the industry ended at Rs46.22 lakh crore as of September, up 5 per cent since the previous quarter. “The world economy is now facing issues related to the Russia-Ukraine conflict, rampaging inflation across countries, and the inevitable raising of interest rates by central banks to bring the easy-money policy to an end. Relative to other countries, India has been resilient in terms of market performance, where other countries have seen a much sharper correction recently,” Melvyn Santarita, Analyst at Morningstar India, said.

With regard to equity segments, inflow has been positive for the asset class over the past 10 quarters, though the momentum of flows has been patchy. In the September quarter, net flows increased to Rs41,962 crore, up significantly from the last quarter, when it saw net inflows of Rs18,358 crore. On the other hand, the asset class experienced net outflows of Rs65,944 crore in the second quarter of the current fiscal.

This came after the first quarter saw a net inflow of Rs1.38 lakh crore -- the first net inflow after six consecutive quarters of net outflows. Industry experts attributed the huge net outflow in the quarter under review to the advance tax requirement that corporates need to meet with it being quarter end.

Further, the allocation category witnessed a net inflow of Rs48,153 crore in the quarter, lower than Rs14,021 crore it received in the previous quarter. It was the second consecutive quarter the asset class witnessed net inflows after experiencing net outflows for three consecutive quarters. “The solutions-oriented and other categories have never seen a quarter of outflows. Both categories have been witnessing regular net inflows despite volatile market conditions. The categories recorded net inflows of Rs479 crore and Rs10,115 crore, respectively, during the September quarter,” the report noted.