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With Rs 20,100 crore net outflow in Feb, mutual fund industry continues to bleed; ETFs only gainers

Amitava Chakrabarty
mutual funds, MF, equity MF, debt MF, liquid funds, money market funds, equity funds, equity oriented funds, debt oriented funds, mutual fund industry, BSE Sensex, NSE Nifty, net outflow in February

Broader markets, especially mid- and small-cap segments, continuing in the negative zone combined with tension after terror attack in Jammu and Kashmir as well as political mud-slinging and uncertainties in the election year, may have resulted into a massive net outflow from the mutual fund (MF) industry in February, 2019.

Amid the gloomy picture, only the Exchange Traded Funds (ETFs) are shining as the top large-cap funds continue to drive the BSE Sensex, NSE Nifty as well as the ETFs, as such funds replicate the portfolios of their respective benchmark indices.

The ETFs saw a net inflow of Rs 5,200 crore in February, compared to a net inflow of Rs 700 crore in January, registering a growth of about 643 per cent.

Although the equity and equity oriented funds (including ELSS) also registered a net inflow or Rs 4,400 crore, but it has declined from the January net inflow of Rs 5,500 crore, registering a decline of 20 per cent in the net inflow.

The worst sufferers were the liquid and money market funds that witnessed a net outflow of Rs 24,500 crore, compared to net inflow of Rs 58,600 crore in January, which is a decline of about 142 per cent.

However, in percentage term, the biggest losers were debt and debt oriented balanced funds with a decline of about 967 per cent as the net outflow in February was Rs 5,200 crore, compared to net inflow of Rs 600 crore in January.

Altogether, the MF industry saw a net outflow of Rs 20,100 crore in February, against a net inflow of Rs 65,400 crore in January, thereby registering a decline of about 131 per cent.

While it is said that investors should make additional investments in low market, but there was mass exits in February, except for the investors entering through systematic investment plan (SIP) route, who maintained parity with net inflow of Rs 8,100 crore in February as in January, 2019.