In a major news, mutual funds have withdrawn Rs 17,600 crore from stock markets in July-August.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.
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.
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.