Investors Withdraw Midst Of November Mutual Fund Market Rally
Mumbai: In November, equity mutual fund schemes crashed to ₹1,690.48 crores. Although, the lowest ₹320 crores seen in June 2016, yet rising stocks helped investors to withdraw the midst of the November mutual fund market rally.
The Association of Mutual Funds in India (AMFI) has released the November figure, 79.91% on Monday. It had seen ₹8,414 crores net inflow in November 2018. Also, 72% lower than ₹6,037.78 crores in October 2019.
Equity mutual fund redemptions stood at ₹11,025.26 crores in October. It leaped to a 20 month high of ₹16,216.66 crores in November. In the same month, equity indices saw their benchmark rising to 1.6%.
Association of Mutual Funds in India
Mr. N.S. Venkatesh, Chief Executive Officer of AMFI said while in a conference call that the investors booked profits as the market touched record highs in November which led to a sharp fall in net inflows. He added that investors kept waiting on the sidelines of the market at new lows so that they could enter once again.
Kaustubh Belapur, Director of Fund Research at Morningstar Investment Adviser India, too assigned the decline in the net inflow to profit-booking. He mentioned that it was not a new phenomenon. Rather, even earlier, equity mutual fund schemes had seen redemption pressure whenever stock markets rallied. Though there can be headwinds for the stock markets, Mr. Belapurkar doest not see a structural slowdown in the net inflows in such schemes.
Foreign institutional investors in November withdrew $2.9 billion. It kept the stock markets optimistic. In the meanwhile, domestic institutional investors, who include mutual funds and insurance companies, sold equity shares worth ₹7,970.29 crores. It remained the steepest sell-off in eight months.
Systematic Investment Plans
In November, the total amount collected through Systematic Investment Plans (SIPs) reached a record high of ₹8,272.87 crores as against ₹8,246 crores in October. Also, SIPs help people to invest some fixed amount in mutual fund schemes at fixed intervals.
Mr. Venkatesh conveyed that money once put into a goal-based, long term SIPs by retail investors, it continues to grow steadily. SIP Asset Under Management (AUM) at an all-time high of ₹3.12 trillion. Also, he said that equity net inflows had come down acutely in November, usually, because of investor booking profits. But the overall mutual fund industry AUM reached an all-time high of ₹27 trillion.
Moreover, in November, the net inflows of ₹20,649 crores came into overnight funds at the highest level for fiscal. It exceeded the net inflows of ₹6,938 crores into liquid funds for the first time.
Dwijendra Srivastava, Head of Fixed Income at Sundaram Asset Management Co. mentioned that the rise in the net inflows in overnight funds compared to liquid funds resulted from the seven-day exit load on liquid funds mandated by the Securities and Exchange Board of India.