Equity mutual funds lose Rs2,231 crore and 5.08 lakh folios in September

Sales of equity funds for September 2013 declined to Rs1,996 crore, its lowest since April 2009

After a month of positive inflow, equity mutual fund schemes lost assets during September 2013. The sales of equity schemes gradually declined to Rs1,996 crore inSeptember from Rs3,327 crore in June 2013. While the equity schemes during August received a net inflow of assets on account of lower redemptions, in September, poor sales and high redemptions led to an outflow of Rs2,231 crore. Redemptions increased to Rs4,227 crore during September from Rs2,326 crore in August. The total number of equity folios declined by 5.08 lakh to 3.12 crore during September from 3.17 crore in August.
 

After almost four months, an equity new fund offer was launched. IDFC Tax Saving Fund, an equity linked saving scheme, was able to gather a subscription of Rs20 crore during its offer period. This had a marginal impact on the total sales of all equity schemes.
 

The volatile market conditions may have put off equity investors, but is it the only reason the quantum of equity scheme sales in September is the lowest since April 2009. In April 2009, towards the end of the financial crisis, sales of equity schemes amounted to Rs1,994 crore. In the following month, sales more than doubled to Rs5,752 crore as the market started recovering. However, the market environment now is different. Though markets have been volatile, there has been no severe crash. Yet, there has been an outflow of Rs13,615 crore over the past year, with just three months of net inflows. There certainly is a deeper issue which the industry which the regulator needs to find out and resolve.
 

During September, except for foreign fund-of-funds, all other category of schemes suffered a net outflow of funds. As much as Rs33,910 crore flowed out from the mutual fund industry during the month. The total assets under management of the fund industry declined by Rs20,134 crore, from Rs 7.66 lakh crore in August to Rs7.46 lakh crore in September. Assets of equity oriented schemes increased marginally by 3% to Rs1.62 lakh crore from Rs1.57 lakh crore over the same period, while the Sensex moved up by 4% to 19,380 from 18,620.

 
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