Debt Mutual Fund Attracts Rs 1.6 Lakh Crore In October On Higher Inflow Into Liquid Funds
The inflow has lifted the assets under management of fixed income mutual funds, or debt-oriented mutual funds, by nearly 10% to Rs 19.51 lakh crore.
Fixed-income mutual funds witnessed a sharp recovery in October, attracting a net amount of Rs 1.6 lakh crore due to robust inflows into liquid and overnight funds after recording heavy redemptions of Rs 1.02 lakh crore in the preceding month.
The inflow has lifted the assets under management of fixed income mutual funds, or debt-oriented mutual funds, by nearly 10% to Rs 19.51 lakh crore at the end of October from Rs 17.8 lakh crore in September, data with the Association of Mutual Funds in India (Amfi) showed.
Going forward, fund flows are likely to remain concentrated in liquid, money market, and high-quality accrual categories, with investors awaiting more clarity on the timing and pace of future rate cuts before extending duration exposure, Nehal Meshram, Senior Analyst, Morningstar Investment Research India, said.
As per the data, debt funds saw an inflow of Rs 1.6 lakh crore in October against a net outflow of Rs 1.02 lakh crore in September. In August, such funds experienced a net outflow of Rs 7,980 crore, while the segment saw a significant inflow of Rs 1.07 lakh crore in July.
'The turnaround in October was largely driven by robust inflows into liquid and overnight funds, as institutional investors redeployed surplus cash after the quarter-end outflows observed in the previous month,' Meshram added.
Out of 16 debt categories, 10 of them witnessed net inflows during the month under review. Of these, liquid funds led the surge with inflows of Rs 89,375 crore, reversing the September outflows of Rs 66,042 crore. Similarly, overnight funds attracted Rs 24,051 crore, reflecting short-term treasury deployments as liquidity conditions eased post the tax outflows and quarter-end adjustments.
Money market funds, too, rebounded strongly, garnering Rs 17,916 crore, suggesting the return of institutional cash balances to short-term vehicles. Additionally, flows in the short-duration segment also rebounded strongly after last month’s heavy redemptions, as investors redeployed money across accrual-oriented categories amid comfortable liquidity and attractive yields. The recovery was led by ultra-short and low-duration funds, while corporate bond funds continued to show steady traction with inflows of Rs 5,121 crore.
In contrast, credit risk funds remained weak, highlighting investors' continued caution toward lower-rated exposures. Dynamic bond funds reported minor outflows of Rs 232 crore after two months of positive traction, and Gilt funds remained weak, registering outflows of Rs 931 crore as volatility in long-term yields persisted amid shifting global rate expectations.
Apart from debt, equity MFs saw inflows of Rs 24,690 crore in October, marking a 9% drop from the Rs 30,421 crore inflow registered in September.
