Investors shun equity mutual funds

Equity schemes of mutual funds continued to witness outflows for the sixth consecutive month, in November, following withdrawals by investors and lacklustre sales by distributors who market these schemes. However, the outflow was the smallest since June. On the other hand, income schemes of mutual funds saw money coming in as a large number of investors parked their investments in fixed maturity plans (FMPs).

According Association of Mutual Funds in India (Amfi) data, equity schemes saw a marginal outflows of Rs 41 crore while income schemes saw inflows of over Rs 11,300 crore in November. Overall, the fund industry saw inflows of approximately Rs 18,300 crore with outflows from equity schemes and equity linked saving schemes (ELSS).

UTI Mutual Fund CMO Jaideep Bhattacharya said, "Investors are booking profits in a rising market but we are looking at some very strong numbers where systematic investment plans (SIPs) are concerned." Bhattacharya added that investors were probably waiting for visibility on the direction of the market. "We hope that in the coming months we might see smart inflows into equity schemes," he said, adding that money was also coming in through FMPs and monthly income plans (MIP) on a regular basis.

Categories that saw inflows in November included money market funds (Rs 6,111 crore), balanced (Rs 255 crore), gilt (Rs 431 crore) and gold exchange traded funds (Rs172 crore). Over Rs 11,259 crore was collected by the various new fund offers(NFO) of which Rs 11,187 crore came into income schemes and Rs 68 crore into Axis Gold ETF and the remaining in fund of funds (FoFs) investing overseas.

Since the market regulator scraped entry loads in August last year, equity schemes have seen a net redemption of over Rs 24,300 crore. A sales head from the leading fund house, said, "In the last few months, there were no new NFOs in the market but in the last few weeks we have seen some fund houses launching new schemes. However many distributors have stopped selling mutual funds." Bhattacharya further adds, "In the coming months we are likely to see revival in equity schemes as many new ELSS schemes will be launched before March, 2011."

Source: http://www.financialexpress.com/news/mf-equity-schemes-see-outflow-for-sixth-month-in-row/722132/0

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