Large outflows hurt equity MFs in July

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₹7,505.32 crore in July from ₹8,244.8 crore in the previous month, showed data from the Association of Mutual Funds in India (Amfi). This was marked by outflows worth ₹1,880 crore from large cap funds, continuing the trend seen in June that saw outflows of ₹2,049.61 crore, as investors booked profits amid a rally in the stock markets. However, mid- and small-cap funds remained the favourite of investors.

Small-cap funds saw inflows worth ₹4,171.44 crore, while mid-cap fund inflows were at ₹1,623.33 crore. While net inflows in equity schemes declined in July over June, the trend remains healthy if longer term average is considered, said experts. Sriram BKR, senior investment strategist at Geojit Financial Services said equity funds saw net inflows of ₹7,505 crore in July were up 37% over the three-month average.

Gross purchases stayed flat month-on-month and redemptions marginally inched up by 2.5%, he added. The markets are at a high, and some profit booking is taking place in large cap funds. Some investors redeem the money and then reinvest, said an industry expert.

There are fewer investors who switch investment schemes and opt for redemptions. Some money may also be already getting relocated to broader market funds. The mid and small cap funds are continuing to see inflows and investors with higher risk appetite are investing, said industry leaders.

Many of these investors are relatively evolved investors and continue investments, they said. Inflows in debt schemes rebounded sharply from the outflows in June. A whopping ₹61,218 crore of investments were seen during July, a 146% rise from a year ago.