scorecardresearchDebt mutual funds saw an outflow of ₹32,722 crore in May: AMFI data

Debt mutual funds saw an outflow of 32,722 crore in May: AMFI data

Updated: 09 Jun 2022, 03:52 PM IST
TL;DR.

Major outflows were seen in ultra-short duration fund, low duration, money market fund and dynamic bond funds; while liquid and overnight funds saw an inflow.

Investors are not willing to lock their money in debt funds for a long tenure in the rising interest rate cycle.

Investors are not willing to lock their money in debt funds for a long tenure in the rising interest rate cycle.

With the Reserve Bank of India (RBI) raising repo rates twice in quick succession, the impact was evident on debt mutual funds— which witnessed a noticeable decline in May.

Collectively, debt funds saw a net outflow of 32,722 crore, as per the latest data released by AMFI (Association of Mutual Funds in India) for the previous month.

Although overnight funds and liquid saw an inflow, debt funds in other categories saw major declines.

Sample this. Ultra-short duration fund saw an outflow of 7,104 crore, low duration fund saw a redemption of 6,716 crore, money market fund fell by 14,598 crore in the month of May, short duration fund decreased by 8,603 crore and medium duration fund fell by 1,222 crore.

At the same time, long duration fund witnessed a redemption of a paltry 2.25 crore, dynamic bond fund saw a decrease of 2,414 crore and corporate bond fund fell by 2,146 crore.

The impact is seen as a direct impact of series of rate hikes by RBI and expectations of further rate hikes. Consequently, investors are not willing to lock their money in debt funds for a long tenure in the rising interest rate cycle. No wonder then the overnight and liquid debt funds bucked the trend and saw an inflow of 15,070 crore and 1,776 crore in the month of May.

In the month of April, debt-oriented schemes saw an outflow of 54,756 crore.

Redemption in close-ended funds

Close-ended schemes saw a total outflow of 10,573.66 crore in the month of May, as per the latest AMFI data.

Out of this, fixed-term plan saw an outflow of 10,039 crore and capital protection-oriented schemes witnessed an outflow of 534 crore.

Not only debt schemes, even equity-oriented close ended schemes also saw an outflow of 860.65 crore.

The ELSS schemes in the close-ended category saw an outflow of 20.35 crore whereas other equity schemes in this category saw an outflow of 840.30 crore, thus, taking the total redemption in close-ended schemes to a total of 11,434.20 crore.

First Published: 09 Jun 2022, 03:52 PM IST