Debt Mutual Funds Witness Rs 8,000 Crore Outflow in August, Driven by Liquid & Gilt Fund Redemptions
Mumbai: Debt mutual funds experienced a net outflow of approximately Rs 8,000 crore in August, reversing recent positive trends, according to data analyzed from fund flows and industry reports. While overall investor interest in debt funds remains positive for teh year-to-date, outflows from liquid and gilt funds were key drivers of the August decline.
Liquid funds led the redemptions with a ample outflow of Rs 13,350 crore, followed by gilt funds which saw Rs 928 crore withdrawn during the month. This contrasted sharply with inflows into overnight and money market funds, which received Rs 4,950 crore and Rs 2,210 crore respectively.medium-duration funds experienced the lowest positive inflow at just rs 111 crore.
The outflows contributed to a marginal decline in the Assets Under Management (AUM) of open-ended debt funds, falling 0.2% month-on-month to Rs 18.71 lakh crore in August from Rs 18.76 lakh crore in July, as reported by the Association of Mutual Funds in India (AMFI).
Despite the August pullback, debt funds have collectively attracted a total inflow of Rs 2.19 lakh crore in the current calendar year and Rs 3 lakh crore in the current financial year.
Analysts note a continued preference for shorter-duration debt strategies. ”Short duration, Low Duration, and Ultra Short Duration funds collectively attracted nearly Rs 1,416 crore, signaling a steady preference for low-volatility accrual strategies,” saeid nehal, an expert following the market. She added that investors likely booked profits and shifted focus to more liquid, shorter-tenor options, resulting in combined outflows of approximately Rs 1,625 crore from Corporate Bond funds and Banking & PSU Funds.
The appeal of overnight funds as a “safe and instantly accessible investment option” continued to drive inflows, while money market funds saw a moderation in additions following record inflows in july.