The suffering category was Hybrid schemes category. Within this category, Balanced funds' category registered outflows of Rs 1,515 crore and Arbitrage Funds saw a huge unprecedented outflow of Rs 33,767 crores in March.
Equity funds across multi-cap and large funds registered the highest inflows in March, at a time when outflows from liquid funds more than doubled.
Liquid funds outflows stood at Rs 110,037 crore in March, way higher than Rs 43,825 crore outflow in February, data from the Association of Mutual Funds in India (AMFI) showed.
Corporates normally park their money in liquid schemes to meet their short-term needs instead of leaving it idling in bank current accounts.
“Outflows from liquid funds in March were on account of corporate advance tax payment and meeting capital adequacy,” NS Venkatesh, Chief Executive, Association of Mutual Funds in India.
Normally, companies rush to redeem their investments from cash plans every quarter to meet their advance tax payment commitments.
Companies pay advance tax in four instalments of 15 percent, 30 percent, 30 percent, and 25 percent on June 15, September 15, December 15, and March 15, respectively.
Within the debt category, credit risk funds continued to witness outflows. However, outflows have increased to Rs 5,568 crore as compared to a lower outflow of Rs 637 crore a month ago.
Continuing downgrades of debt instruments from IL&FS, Dewan Housing Finance (DHFL) and Reliance Home Finance by rating agencies have hurt credit risk funds since the troubles first surfaced in June 2018.
Defaults by non-banking financial companies (NBFCs) have continued to impact credit risk funds.
The saving grace was overnight funds that saw an inflow of Rs 26,653 crore in March 2020 compared to outflows of Rs 1,473 crore in February.
Overnight funds invest in CBLO (collateralised borrowing and lending obligations) and repo/reverse repo instruments that mature in one day.
Mutual fund experts said the rate of return on overnight securities may be lower, but overnight funds will provide better capital protection.
On the equity side, all categories registered inflows reposing retail investors continued faith in equities despite Nifty registering five-year low in March 2020. Sensex and Nifty indices each fell 23 percent in March.
Multi-cap and large-cap funds saw the highest inflows of Rs 2,268 crore and Rs 2,060 crores, respectively.
In comparison, multi-cap funds had to registered inflows of Rs 1,624 crore and large-cap funds have reported inflows worth Rs 1,606 crore.
Fund managers attributed inflows across capitalization categories to attractive valuations, which is lowest since 2015.
Focussed funds brought in net inflows of Rs 2,000 crore, Midcap funds saw an inflow of Rs 1,233 crore.
Further, March being financial ending and also tax investment month, ELSS added another net inflow of Rs 1,554 crore to MF Industry AUM.
Exchange-traded funds saw inflows worth Rs 2,076 crores in March on back of Rs 16,344 crore in February.
The suffering category was hybrid schemes category. Within this category, Balanced funds' category registered outflows of Rs 1,515 crore and Arbitrage Funds saw a huge unprecedented outflow of Rs 33,767 crores in March.
AMFI CEO NS Venkatesh attributes the sudden outflow in Arbitrage Funds during March to the index futures being at a discount to cash markets.
Overall, the industry witnessed outflows of Rs 212,737 crores on back of outflows of Rs 1,985.52 crore in February.
As a consequence, assets under management (AUM) fell marginally to Rs 22.26 lakh crore, a recent low compared to Rs 27 lakh crore levels noticed during January 2020 when Index was at its peak.
Reflecting optimism for FY 20-21 starting April 2020 Venkatesh was of the view "Industry should do well going ahead; despite the 23 percent fall in the market, retail numbers are strong. Debt part outflows were expected because of March phenomenon which should come back in April."Time to show-off your poker skills and win Rs.25 lakhs with no investment. Register Now!
