Investor exits in equity mutual funds top Rs 27,330 crore in 2 months

COIMBATORE: With the markets on a sticky wicket, investors in equity mutual funds (MF) (including ELSS or equity-linked savings schemes) have taken the exit route pulling out $3.8 billion ( Rs 27,330 crore) from equity MFs (including ELSS) in July and August.

Redemptions or investor exits in equity MFs (including ELSS) surged 29.5 per cent y-o-y and 66.1 per cent month-on-month to Rs 15,702 crore in August, data with the Association of Mutual Funds in India (AMFI) showed.

The huge increase in redemptions has resulted in a decrease in net inflows into equity MFs in the last two months. Net inflows into equity MFs slumped to a five-month low during August because of the uncertainty in the markets.

“The markets had a great run in the last five years and now investors are doing some profit booking,” said Gopal Agrawal, senior VP, investments, DSP MF. “Investors are worried about the hike in crude oil prices and uncertainty (in the markets),” he said.

The steep increase in redemptions has resulted in a sharp fall in the money deployed by fund houses in the equity markets. Net investments by equity MFs in the markets slumped to around Rs 4000 crore per month in July and August compared to an average of over Rs 10,000 crore per month so far in 2018, data with markets regulator Sebi showed.

“There is a concern among investors about the current market conditions,” said Srikanth Meenakshi, co-founder, fundsindia.com, an investment platform for MFs. “There is not much enthusiasm among new investors about making an entry. Existing investors are also adopting a wait and watch approach,” he said.

“Those who made lumpsum investments 3-4 years ago are pulling out money as they have earned good returns. Moreover, markets have also turned volatile,” a senior industry official said. The average net sales of equity MFs per month stood at Rs 8,900 crore during March-August 2018, a decline of 50 per cent from the average during the dislocation caused during the implementation of GST.

The money collected through SIPs (systematic investment plans) has also stagnated at about Rs 7,500 crore during the last three months. SIPs, which can be started for as low as Rs 500 per month, largely come from retail investors.