MUMBAI: Advance tax outflow and GST payments by corporates in mid-September, withdrawal of funds by banks including a large redemption by SBI, and pull-outs by corporates after the loan default by IL&FS combined to record a Rs 2.3-lakh-crore net outflow from the mutual fund industry last month.
As a result, the MF industry recorded a 12.5% drop in assets under management (AUM) in September to Rs 22 lakh crore, from Rs 25.2 lakh crore as of end-August. However, equity funds witnessed net inflows of Rs 10,237 crore, while tax-saving funds (also called ELSS) brought in Rs 935 crore, data released by industry trade body AMFI showed. Of the total outflow, Rs 2.1 lakh crore was from liquid funds while an additional Rs 30,504 crore was redeemed from income funds.

Top MF officials said that in addition to outflows from liquid funds because of companies’ obligation to meet payment deadlines for income tax and GST, the loan default by IL&FS — which hit the debt segment and also impacted the equity market — led to redemptions from both income and liquid funds.

On the equities side, despite the market volatility and the credit event, mainly the IL&FS default, the flows through equities from retail investors was positive, N S Venkatesh, CEO of AMFI, said. Systematic investment plans (SIPs) continued to show an increasing trend with Rs 7,727 crore of funds mobilised in September, he said, up from Rs 7,658 crore in August.

Venkatesh also pointed out that the quarterly average AUM for the July-September period showed an annual growth of 16%. “ There has been a robust expansion in the number of folios at 26% annual growth rate, which now stand at over 7.75 crores,” the AMFI CEO said.