MFs witness R58,000-cr net outflow during May

New Delhi, Jun 10: Investors have pulled out more than R58,000 crore from various mutual fund (MF) schemes in May on account of huge outflow from the money market and gilt funds.

In comparison, a total of R243 crore was invested in May last year.

The outflow was mainly due to withdrawal of money from liquid or money market and gilt funds.

According to data from the Association of Mutual Funds in India (Amfi), investors withdrew a net R58,185 crore from MF schemes in May 2016 as against an inflow of R1.7 lakh crore in the preceding month.

Generally, liquid funds witness heavy outflow towards the end of the March and the trend gets reversed in April as banks and corporates reinvest the surplus, which they had withdrawn to pay their financial and advance taxes.

The liquid or money market segment witnessed R69,399 crore being pulled out last month while R837 crore was taken out from gilt funds.

However, inflows continued in equity schemes on strong retail participation. The category witnessed infusion of R4,721 crore.

“Every year in March, high outflow is a routine phenomenon and we should not read much into it. It happens due to high redemptions in liquid funds by big corporate for the year closing. Like the trend of many years, even this year also, more than 90% of the redemption for the March is in liquid funds,” Bajaj Capital senior VP and national head-mutual funds Anjaneya Gautam said. “These funds generally come back in April as per the trend."

Money market fund's portfolio comprises short-term (less than one year) securities representing high-quality, liquid debt and monetary instruments.

Overall, the asset base of the country's fund houses dropped to R13.81 lakh crore last month, from R14.22 lakh crore in April-end.

The outflow was mainly due to withdrawal of money from liquid or money market and gilt funds