Generally, companies withdraw investments from liquid funds to pay quarterly advance tax.
The mutual fund industry witnessed the highest outflows of Rs 1.5 lakh crore among income and debt schemes in the month of June, according to the data from Association of Mutual Funds in India (AMFI).
Last month, credit risk funds continued to register outflows. The category registered outflows worth Rs 2,694 crore.
Mutual fund managers attributed the fall in liquid funds to quarter-end phenomenon while credit risk funds suffered on the back of the recent credit risk events.
"This is a usual quarter-end phenomena where the industry does witness temporary redemptions from liquid funds,” said NS Venkatesh, Chief Executive Officer, AMFI.
Agreeing with Venkatesh, Vishal Kapoor CEO IDFC MF said, “On the fixed income side, while a Rs 1.7 lakh crore outflow was reported, much of it is due to the quarter-end phenomena of liquid fund redemptions by corporates. “
Generally, companies withdraw investments from liquid funds to pay quarterly advance tax.
Notably, the Average AUM for fixed income has grown by Rs 2,000 crore while liquid fund average assets were flat.
On the equity front, all equity funds witnessed net inflows of Rs 7,663 crore in the month of June.
Net inflows for the open-ended growth and equity-oriented schemes have been consistently rising for the last three months since April 2019, from Rs 4,608.74 crores at the start of the fiscal to Rs 7,663.14 crores for June 2019, largely driven by Multi-Cap and Large Cap Fund categories, as per AMFI data.
The net inflows in the equity-oriented schemes have grown three times faster in the last one month at Rs 2,256.37 crores from May 2019 to June 2019, compared to the rise in the earlier month at Rs 797 crores from April 2019 to May 2019.
“Political stability, lower inflation coupled with RBI stance to lower interest rates leading to possible robust growth in the corporate earnings is leading enhanced retail flows towards equity oriented schemes,” AMFI CEO Venkatesh said.
The net outflows from income and debt-oriented schemes to the tune of Rs 1.71 lakh crores during June 2019 have led to an overall decline in the June month-end AUM at Rs 24.25 lakh crore from Rs 25.93 lakh crore as on May 31, 2019.
The overall average AUM for June 2019, however, stood higher at Rs 25.81 lakh crores, as compared to Rs 25.43 lakh crores a month ago.
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