The assets under management (AUM) of mutual funds dropped to an 11-month low to ₹35.64lakh crore in June against ₹36.59lakh crore last August, reported Business Line.
This is seen as the direct impact of sharp mark-to-market losses in debt fund assets.
The previous low of ₹35.31 lakh crore was logged in July 2021. According to AMFI (Association of Mutual Funds in India) data, redemptions in June at ₹9.95lakh crore were the highest in the last 11 months. In August 2021, investors took out ₹7.37lakh crore.
Debt fund AUMs dipped to ₹12.34lakh crore last month against ₹14.75lakh crore logged in August 2021 as redemptions surged post the Reserve Bank of India ending its accommodative stance and raising interest rates.
Investors pulled out ₹1.25lakh crore from debt funds in the last two months. Despite mark-to-market losses, AMFI data showed assets of equity mutual funds going up 4 per cent at ₹12.86lakh crore ( ₹12.33lakh crore) on strong flows through Systematic Investment Plans (SIPs).
Despite the market fall, SIP flows increased 24 per cent to ₹12,276 crore in June against ₹9,923 crore in August 2021.
Volatile market Deven Mistry, Research Analyst, Motilal Oswal, told BL, the adverse macro backdrop, heightened worries on rising interest rates, elevated crude oil prices and liquidity tightening have kept the market volatile and jittery. However, investors continued to invest in mutual funds with strong SIP investments of over ₹10,000 crore for the 10th consecutive month, he added.
Arun Kumar, Head of Research, FundsIndia, said domestic institutional flows tend to dip when markets turn volatile and one year returns fall, as now. While the strong equity flow in June is a positive for the markets, one needs to keep a close watch on the equity MF inflows and SIP trend in the coming months as they are critical given the backdrop of the heavy FII outflow, added Kumar.