This is the second time in the calendar year that equity schemes have suffered a net outflow of more than Rs2,000 crore
August was a terrible month for the mutual fund industry. Equity funds suffered massive redemptions amounting to Rs5,671 crore and with sales of just Rs3,385 crore, the net outflow of as high as Rs2,286 crore. This has been the highest outflow since February 2012 which saw an exodus of Rs2,809 crore.
In August the Nifty rallied by 3% from 5,241 to 5,421 before finally closing marginally higher at 5,259 while equity assets under management fell by 1.19% during this period. There were no new equity schemes launched during the period. However, an overseas scheme, DSP BlackRock US Flexible Equity Fund, raked in Rs26 crore. The net sales of equity schemes were marginally higher compared with the previous month, but it was still 42% lower than the total sales for the same month the previous year.
The total redemptions from equity schemes have been slowly increasing over the last four months and with no growth in sales we have seen a net outflow in the last three months. For the first eight months of 2012 we have seen a total net outflow of as much as Rs6,834 crore. In the first eight months of the 2011 we saw a total net inflow of Rs5,591 crore.
Net outflows will not reverse easily, especially now that the Securities and Exchange Board of India (SEBI) has announced a new set of norms which created a lot of flutter among both distributors and investors. As we have reported in various articles in the past month, in the proposed changes the investor is sidelined whereas the fund houses would benefit from the new cost structure and independent financial advisors were totally left out.
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