Outflows from equity MF continue in November 2020

Investors in equity mutual funds continued to redeem their holdings in November 2020. According to the monthly data released by Association of Mutual Funds in India (AMFI), equity mutual funds saw net redemptions of Rs 12,917 crore in the month of November 2020 as compared to Rs 2,724 crore in the previous month. Even the hybrid funds witnessed net redemptions worth Rs 5,249 crore as against Rs 1,681 crore in the month of October 2020.

Though the number of systematic investment plan (SIP) account ascended from Rs 3.37 crore in October 2020 to Rs 3.40 crore in November 2020, the monthly contribution dropped in November to Rs 7,302 crore as against Rs 7,800 crore in October. The total assets under management (AUM) for the mutual fund industry stood at Rs 30 lakh crore in November 2020 as against Rs 28.22 lakh crore in October 2020.

Having said, fixed-income funds continued to catch investors' interest in the current low-interest rate environment. The total net inflows in the debt fund category stood around Rs 44,983 crore in November 2020. In fact, investors in debt funds are betting on short-term debt funds with low duration funds, short-duration funds, and corporate bond funds, witnessing net inflows of Rs 27,107 crore, Rs 13,093 crore, and Rs 11,093 crore, respectively in the month of November 2020. Furthermore, outflows from credit risk funds continued as it witnessed an outgo of Rs 15.39 crore in November.

Every time the markets inches up, investors are booking profits from equity mutual funds. Also, the safe-haven gold exchange-traded funds (ETF) witnessed an outflow of Rs 141 crore in November as compared to the net outflow of Rs 384 crore in the preceding month. Due to weak gold prices, gold ETFs on an average corrected close to 6 per cent.