Equity flows slip 78 pc in November

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Net inflows into equity mutual funds dipped sharply to multi-year lows in November as on one hand, outflows from credit risk funds continued, while inflows into equity funds fell as much as 85 per cent. Net inflows into equities stood at Rs 933 crore last month, a three-year low and a drop of nearly 85 per cent month-on-month, according to data released by the Association of Mutual Funds in India (AMFI).

Equity ETFs registered inflows of Rs 2,954 crore in November as compared to Rs 5,906 crore in October. "Equity net inflows have fallen sharply in November due to profit-booking by investors," said NS Venktatesh, CEO, AMFI. Credit risk funds continued to suffer due to huge outflows. Last month, the 44-player mutual fund industry witnessed outflows of Rs 1,899 crore from credit risk funds in November, an increase of 37.4 per cent from the month ago period. Meanwhile, SIP inflows soared to all-time highs in November, AMFI said on Monday.

It was at Rs 8,272 crore, up 27 crore from last month's numbers. The SIP inflows in October were Rs 8,245 crore.Total number of SIP accounts climbed further to 2.94 crore, an addition of 5.33 lakh accounts during the month. The asset under management (AUM) via SIPs jumped to Rs 3.12 lakh crore, up from Rs 3.03 lakh crore in the last month.

Since the beginning of the credit crisis in July last year, credit risk funds have consecutively seen outflows every month. Continuous outflows from this category have led to fall in AUM. So far in FY20, assets under management (AUM) of credit risk funds have fallen to Rs 63,754 crore from Rs 79,643 in April, a drop of nearly 20 percent.

Vishal Kapoor, CEO, IDFC AMC said on the data, "It's heartening to see the industry add over 5 lakh SIP accounts in November - the highest so far this year - which is a strong testament to the continued value retail investors see in building investments through SIPs. In the Fixed Income space, investors continue to favour high quality portfolios in the short term space, with strong growth being registered in the Banking & PSU and Corporate Bond categories. Additionally, the Arbitrage Fund category continues to find favour, especially with HNIs looking for steady net returns."

The downgrade of debt instruments from IL&FS and Dewan Housing Finance (DHFL) and Reliance Home Finance by rating agencies have hurt credit risk funds.

Another category under income and debt oriented schemes -- liquid funds -- saw a massive MoM fall in terms of inflows.Liquid funds, which are used by companies to park surplus cash, saw inflows of Rs 6,938 in November compared to inflows of The mutual fund industry was affected due to large exits by institutional investors from liquid funds, particularly in the first seven days.

From October 19, SEBI allowed fund houses to impose graded exit load on liquid fund investors who exit the scheme within seven days from the date of purchase.It allowed fund houses to impose an exit load of 0.007 percent on investors if they redeem their investment within a day.This means investors redeeming after a day will have to pay a higher exit load than those redeeming on the seventh day. Overall, the industry saw inflows of Rs 54,419 crore in November, with industry AUM at Rs 27.04 lakh crore.Rs 93,203 crore in the preceding month.

"Some liquid fund investors may have shifted to overnight funds due to the implementation of exit load in liquid funds," Venkatesh said.

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