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Suresh Parthasarathy

Chennai, Nov. 8 Worries about the mutual funds suffering huge redemptions in the month of October appear a little exaggerated, especially on the equity side.

A scrutiny of data on fund flows within the mutual fund industry reveals that investors have pulled out only a fraction of the monies invested in these schemes.

Outflows, in October, from equity funds, at Rs 706 crore is less than one per cent of the total assets of Rs. 98,430 crore managed by the industry.

This is despite the Sensex hitting new lows below 8,000-level in the last week of the month.

Net outflows from equity funds for the month were at Rs 706 crore (Inflows of Rs 1,965 crore minus outflows of Rs 2,671 crore).

Even on an over-all basis, net outflows last month from all funds were not significantly larger than the previous month’s.

0These totalled Rs 46,793 crore, compared to Rs 45,655 crore in September – a little under nine per cent of the size of the total asset base of the mutual fund industry at the end of the previous month.

However, income funds have suffered higher redemptions. Income funds – comprising ‘open-end’ funds, ‘interval’ funds and ‘closed-end’ funds – saw the largest net outflows.

Total redemptions for ‘closed-end’ debt funds – Fixed Maturity Plans or quite simply FMPs under industry parlance – stood at Rs 18,631 crore for the latest month (Rs 17,128 crore in September).

Such funds still managed, as of end-October, assets worth Rs 94,194 crore.

While redemptions were not as big as feared, the launch of new FMPs has drastically come down in October and the money collected through

New Fund Offers stood at Rs 6,778 crore, compared to Rs 23,173 crore in September.

This has hurt the industry hard.

‘New Fund Offers’ have, for all practical purposes, served to roll over monies from maturing schemes.

‘Liquid’ funds, in which corporates park their temporary surpluses, actually saw an easing of redemptions in October.

The category saw net inflows of Rs 3,256 crore in October, after recording outflows of Rs 19,675 crore, last month.

Outflows due to advance taxes and other liquidity-related problems, probably led to higher outflows last month.

Gilt funds and tax saving funds also saw inflows for the month.

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