A 15 per cent spike in the stock markets since the beginning of the year has given retail investors an opportunity to exit their mutual fund (MF) schemes. The net outflows from MFs were Rs 456 crore in January, according to statistics from the Association of Mutual Funds in India (AMFI).
However, the actual sale figures were much higher. The industry witnessed inflows of Rs 2,700 crore, whereas redemptions were to the tune of Rs 3,200 crore, leading to net outflows of Rs 456 crore.
Fund managers said that many investors who were stuck since 2009-10 due to the continuous decline in the markets chose to sell their units in the recent rally. The outflows last month were the highest since July, when investors had sold to the tune of Rs 729 crore. Even sales of equity schemes continued to be slow during the month.
| RUSHING FOR THE MUTUAL FUND DOOR | |
| Net inflows/outflows | |
| Categories of schemes | Net onflows/(Outflows) |
| Income | -2,926 |
| Equity | -456 |
| Balanced | -101 |
| Liquid/Money Market | 26,429 |
| Gilt | 521 |
| ElSS | 76 |
| Gold ETFs | 82 |
| Other ETFs | -11 |
| Fund of Funds Investing Overseas | -61 |
| All figures in Rs Crore | |
Net Inflows/(Outflows)
Rajiv Anand, chief executive officer (CEO), Axis Mutual Fund, says, “Inflows in the equity segment have largely been not strong. Redemptions were more than inflows. In other words, the number of new investors was lesser than those who moved out.”
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Fund managers said the large redemption pressure came only in the last few days of the month as investors moved to tax-free bonds of NHAI, PFC, Hudco and IRFC.
Investors had been stuck for two years. “They preferred to book marginal gains or losses in their mutual fund investments and shift to such bonds,” says Gupta.
This holds true for investors in SIPs of equity-diversified funds. For instance, till December an equity folio with investment of Rs 2,000 per month over the last one-and-a-half-years was 10 per cent lower than the investments. But the steep bull run in January brought the fund value at par with the costs.
The Bombay Stock Exchange Sensitive Index, or Sensex, after touching its peak in November, 2010, lost a fourth of its value in 2011. Investors, even those with systematic investment plans (SIPs), made losses during this period.
“So, the January rally provided an opportunity for investors to quit,” explains Akshay Gupta, CEO of Peerless Mutual Fund. It was a rare occasion to see such a sharp rally in indices and the selling which followed was more of an opportunistic call by investors, he adds.
Of the total industry assets, equity is 22 per cent at around Rs 1.6 lakh crore. This category is mainly dominated by retail and high net worth individuals.
According to MF tracking agency Value Research, so far this year the equity-oriented schemes have outperformed other asset classes.
Schemes in the categories of banking, infrastructure, FMCG and tax planning have been among the top performing schemes of the industry in the last one month.