Yes, Stocks Are Rocking, But Debt Mutual Funds Get All The Money

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Even as the Nifty gets a positive return for the fifth month in a row, it’s debt mutual funds that are eating the cake. Net flows into Debt funds were the highest since April 2015 with a whopping Rs. 43,000 cr. net invested!

Debt Funds: Massive Flows Inward

  • We saw investors buy big time into Debt funds as more than 73,000 cr. worth purchases were made in July
  • Redemptions were not extraordinary, at Rs. 30,694 crore.
  • Which means the net inflows were the highest at nearly 44,000 cr.

Monthly Mutual Fund Data Debt Net Inflow Outflow July 2016

Monthly Mutual Fund Data Debt Purchases Redemptions July 2016

Equity: Great Month, But Investors Uninterested

  • Purchases from existing schemes for the month of July, 2016 stood at Rs. 1,530,589 crore. This revenue was generated from the existing bunch of 2,412 schemes. The revenue generated is highest for the period of review i.e. 16 months.
  • On the contrary, purchases from new schemes (tends to be very small) for the month of July, 2016 stood at Rs. 1,722 crore. New schemes launched were highest in the month of March, 2016 at 57 new schemes (however the revenue generated from them wasn’t that much).
Monthly Mutual Fund Data Equity Net Inflow Outflow July 2016

Monthly Mutual Fund Data Equity Purchases Redemptions July 2016

Balanced Funds: Slow But Catching Up

  • Net Inflow/ Outflow is basically the net of purchases and redemption made.
  • Net Inflow for July, 2016 stood at Rs. 102,720 crore with the 4 major categories witnessing sales greater than redemption. This net flow was better than Rs. 119,060 crore for the month of July, 2015.
  • For the financial year 2015-16, the month with the highest inflow was Oct-15 with Rs. 134564 crore and the highest outflow was Mar-16 with Rs. 73,113 crore. Apr-16 has already thrashed the highest inflow number with Rs. 170,161 crore while we are yet to see a major outflow like the one witnessed in Mar-16.

Monthly Mutual Fund Data Balanced Net Inflow Outflow July 2016

While the above chart shows the net values, here is a more detailed chart with both the sales and redemption information. Notice how Jul-16 is the month with the highest sales but lower redemption.

Monthly Mutual Fund Data Balanced Purchases Redemptions July 2016

The Big Data Chart: Inflows, Outflows and Net flows

  • AMFI currently classifies the existing/ new sales and repurchases/ redemption under 10 different categories. While not every category is a major contributor, we have taken the Top 4 categories with the majority contributions. These have been classified as Debt Funds, Equity + ELSS, Balanced Funds and the largest – Liquid/ Money Markets Funds. Other categories ignored are Infrastructure Debt Fund, Gilt, Other ETFs including Gold ETF and Fund of Funds Investing.
  • Point to note would be Jul-15 and Apr-16 which both reflect a similar trend as witnessed for Jul-16 i.e. inflows beating outflows across all 4 categories.
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Monthly Mutual Fund Data Sales Redemptions Repurchases Inflow Outflow2 July 2016

Source: AMFI -> Research & Information -> AMFI Monthly

Here are some of our previous publications on such AMFI reports:

How Much Do Banks Love Their Mutual Fund Subsidiaries?

Banks See 30% Lower Mutual Fund Commissions: The Annual MF Report on Commissions

Today we cover the monthly report covering the sales and redemption/ repurchase data of Mutual Funds in India. This would be a regular feature going forward. Do share your views and feedback on this. Sales/ Redemption values depicted in graphs are in millions.

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Disclaimer

Nothing in this newsletter is financial advice and should not be construed as such. Please do not take trading decisions based solely on the matter above; if you do, it is entirely at your own risk without any liability to Capital Mind. This is educational or informational matter only, and is provided as an opinion.