Liquid funds likely to see further investor pullouts in coming months

In June, liquid funds saw a net outflow of Rs 1.5 trillion, which led to the schemes' assets dropping by 27 per cent to Rs 3.9 trillion

Liquid funds, which had seen sharp outflows in June, are expected to see further investor pullouts in the coming months. According to a Crisil report, investor allocation is likely to move towards other debt schemes such as ultra short duration and overnight schemes, following the new valuation norms laid down by the Securities and Exchange Board of India (Sebi).

“Institutional investors — which are the biggest investor segment of the funds — might look at other categories for investments. Investors with a high-risk appetite might look at rebalancing their portfolios to higher-yield, higher-risk categories such as ultra-short and money market funds