Thursday, August 5, 2021

Mutual funds have withdrawn Rs 17,600 crore from stock markets in July-August

In a major news, mutual funds have withdrawn Rs 17,600 crore from stock markets in July-August. This is mainly on account of negative sales in equity-oriented schemes.

“The recent withdrawals by mutual funds can be attributed to the negative fund flows in equity mutual fund schemes since the last two (July-August) months,” said Divam Sharma, co-founder of Green Portfolio, a Sebi-registered portfolio management services.

Alok Agarwala, Chief Research and Investment Officer at Bajaj Capital, said mutual funds’ withdrawal from equities during July-August was driven by negative net sales in equity-oriented schemes.

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Equity and equity-oriented mutual fund schemes saw massive net outflows during the period. This could have been caused by investor concerns over expensive valuations and disbelief in the recovery, he added.

Equity-oriented mutual funds have witnessed a cumulative net outflow of Rs 6,450 core in July and August while hybrid funds too saw a cumulative net withdrawal of Rs 12,121 crore over the same period.

Harshad Chetanwala of My Wealth Growth also said the redemption in equity-diversified funds and equity-oriented hybrid funds categories were higher in the past two months than the inflows as investors booked profits because stock market surged sharply.

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Agarwala said fresh inflows in equity mutual funds have declined post COVID-19 while outflows kept rising. In fact, monthly SIP (systematic investment plans) inflows have fallen below Rs 8,000 crore post COVID-19.

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