Investors pull out Rs 70,000 cr from debt MFs in June qtr

Investors continued to withdraw from mutual funds focused on investing in fixed-income securities for third consecutive quarter and pulled out over ₹70,000 crore in April-June due to high inflation and an increasing rate cycle.

“In the next (September) quarter, it is safe to assume that monetary conditions will be tighter in terms of lower amount system liquidity and higher regulatory rates, both of which should see further reduction in mutual fund debt corpuses,” Sandeep Bagla, CEO Trust Mutual Fund, said.

Interest rate will be the major factor to dictate flow in debt mutual funds in coming quarters. Once rates start stabilizing, inflows can be expected, Ankit Yadav, director of Market Maestroo, said.

The latest outflow has pulled down the asset managed by fund managers for debt fixed-income funds by 5% to ₹12.35 lakh crore at June-end from close to ₹13 lakh crore at the end of March, data available with the Association of Mutual Funds in India (Amfi) showed.

After hitting a peak of ₹14.16 lakh crore in the first quarter of fiscal 2022, assets under management for the fixed-income category has been on a steady decline and since then the asset base has fallen by 13%.

According to the data, net outflow from open ended fixed- income mutual funds or debt mutual funds was at ₹70,213 crore in the quarter under review.

Month-wise, the quarter started on an optimistic note in April with the segment attracting ₹54,756 crore, however, this changed in May and June, as the category saw net outflows of ₹32,722 crore and ₹92,247 crore, respectively.

This came following a net outflow of ₹1.18 lakh crore in March quarter and ₹21,277 crore in quarter ended December 2021. Prior to that, the category had seen a capital infusion to the tune of ₹10,858 crore in July-September 2021.

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