अब आप न्यूज्ड हिंदी में पढ़ सकते हैं। यहाँ क्लिक करें
Home » Business » Debt MFs log Rs 2.3 lakh crore outflow in 2022 on rate hike cycle

Debt MFs log Rs 2.3 lakh crore outflow in 2022 on rate hike cycle

This was way higher than a net withdrawal of Rs 34,545 crore from the segment in 2021, the Association of Mutual Funds in India (Amfi) data showed.

By Newsd
Published on :
Mutual Funds: How to invest online?

Increasing interest rate cycles and better returns from equity weigh down on mutual funds focussed on investing in fixed income securities in 2022, with the segment witnessing a net outflow of Rs 2.3 lakh crore, while a reversal of trend is expected in 2023 on anticipation of slowdown in the rate hike cycle.

This was way higher than a net withdrawal of Rs 34,545 crore from the segment in 2021, the Association of Mutual Funds in India (Amfi) data showed.

While it has been a challenging time for debt funds overall, the category is likely to see a reversal in this trend in 2023 on indication of a slowdown in the rate hike cycle, Kavitha Krishnan, Senior Analyst Manager Research, Morningstar India, said.

”As equity markets continue to look too stretched from a valuation’s perspective, investors might move into medium term debt categories that will offer them a better risk reward ratio. Credit funds have also been presenting a good investment opportunity, considering the widening of spreads between G-secs and corporate bonds,” she added.

The debt mutual funds have witnessed outflows during five out of 12 months in 2022. The outflows have also been characterized by the magnitude of withdrawal seen in the months of March and June at Rs 1,14,824 crore and Rs 92,248 crore respectively.

Overall, net outflow from open ended fixed-income mutual funds or debt funds stood at Rs 2.3 lakh crore in 2022, the data showed.

”With the rise in inflation and subtle uncertainty on how the interest rates might shape up in the near future, the investors have become cautious because of which we have seen such a huge outflow in debt funds,” Manish Maryada CEO and co-founder, Fello, a game-based savings app, said.

Morningstar India’s Krishnan also said that concerns around rising inflation, a rising interest rate cycle, and the falling rupee have all likely led to a diminishing investor interest across debt fund categories.

The rising interest rate cycle also led to lower yields and investors found that they were better rewarded in asset classes like equity, gold and real estate, she added.

Most of the 16 fixed-income or debt fund categories have seen outflows in the year 2022 with short duration funds witnessing a net withdrawal of over Rs 49,200 crore, and corporate bonds Rs 40,500 crore.

On the other hand, the liquid category saw inflows to the tune of Rs 17,940 crore, while money market and ultra-short duration segments saw flows of Rs 9,250 crore and Rs 1,021 crore, respectively.

The liquid, ultra short-term, money market and overnight fund categories constitute a substantial portion of the total assets (about 50 per cent) within the debt fund category.

The outflow has led to asset base of debt mutual funds declining by more than 11 per cent to Rs 12.41 lakh crore in December 2022 from Rs 14.05 lakh crore in December 2021.

Moreover, the number of folios in debt funds shrank by 5 lakh to 73.38 lakh in December 2022 from 78.4 lakh a year ago.

Apart from rising interest rate scenario, better returns from equity funds have likely led to investors moving out of debt funds in favour of equity.

Equity-oriented mutual funds saw net infusion of Rs 1.6 lakh crore in the entire 2022 despite volatility in stock markets and exodus by foreign portfolio investors (FPIs).

Investors are preferring equity as it is known to be a value creator asset class and its increasing awareness amongst the investors is driving the growth in investments in equity-oriented schemes with an aim to achieve long-term financial goals.

Related

Latests Posts


Editor's Choice


Trending