June 2022 sees heavy outflows from debt funds; equity flows robust

  • India Infoline News Service
  • 11 Jul , 2022
  • 11:59 AM
The pressure was visible across debt funds and arbitrage funds as companies redeemed debt fund holdings for advance tax payments in June. This is a normal cycle and debt funds do see outflows around the quarterly closing. However, the good news was again on the SIP front, which held steady at Rs12,276 crore in the month of June 2022.

The overall MF AUM in June 2022 fell sharply to Rs35.64 trillion. This was on the back of debt fund redemptions, the virtual drought of NFOs due to regulatory restrictions and value depletion of equities in a falling market. The fall was due to global and domestic headwinds in the form of Fed hawkishness, rising inflation and the growing fear of recession.

Data Source: AMFI

Overall MF net outflows for June 2022 stood at Rs(69,853) crore. This was driven by open ended debt fund outflows of Rs(92,248) crore and outflows of Rs(2,280) crore from hybrid funds (principally arbitrage funds). Close-ended Capital protection schemes also saw outflows of Rs(3,985) crore. All categories of open-ended equity funds and passive funds saw net inflows in June 2022. The current AUM mix is; Income Funds (34.63%), equity funds (36.08%), hybrid funds (13.21%) and passive & solution funds (15.41%). The residual 0.67% was accounted for by close-ended funds.

In March 2022, the AUM of active equity funds had crossed that of debt funds. That lead has been sustained since. However, the depletion in equity values has ensured that the share of equity funds has tapered; although at above 36%, it is at an all-time high. Overall MF AUM grew just 5.85% yoy from Rs33.67 trillion in June 2021 to Rs35.64 trillion in June 2022. Hybrids, solution funds and passive funds account for 28.62% of the total AUM.

Debt funds see outflows in June 2022 on treasury compulsions

In the last 4 months, debt funds have seen outflows in 3 months. April 2022 was an exception, but a combination of treasury management compulsions and hawkish central bank stance triggered outflows from debt funds. Overall open-ended debt fund outflows were Rs(92,248) crore in June 2022. The selling was prominent in low duration funds, overnight funds, and money market funds, but even corporate bond fund saw heavy selling.

Long duration funds and 10-year gilt funds were the only debt fund categories to see inflows in June 2022, but the flows were not significant. Let us first look at debt fund outflows at the long end of the yield curve. In June 2022, selling was prominent in corporate bond funds Rs9,086 crore, Floater Funds Rs7,078 crore, Banking & PSU funds Rs3,881 crore, medium duration funds Rs1,228 crore and credit risk funds Rs482 crore.

We now turn to the short-end debt funds where treasury induced selling was visible in June 2022. The selling included overnight funds Rs20,668 crore, liquid funds Rs15,783 crore, ultra-short duration funds Rs10,058 crore, low duration funds Rs8,532 crore, money market funds Rs8,126 crore and short duration funds Rs6,649 crore. Despite the promise of higher yields, investors don’t appear to be too enthused by debt funds at this juncture.

SIP flows hold robust equity fund flows in June 2022

Equity fund AUMs were hit by two factors. Firstly, market value depletion led to a lot of AUM damage for equity funds. Secondly, the SEBI freeze on NFOs just expired in June 2022 and we should see fresh NFOs from July. However, that hardly deterred the SIP flows, which remained stable in June 2022 at Rs12,276 crore. While the momentum of fresh SIP accounts may be plateauing, investors are persisting with SIPs.

In the last 4 months, equity fund flows have been volatile, but positive. Equity funds saw inflows of Rs28,464 crore in March 2022, Rs15,890 crore in April 2022, Rs18,529 crore in May 2022 and Rs15,498 crore in June 2022. Like in May, even in June 2022, no category of equity funds saw net outflows, which is commendable in the absence of NFOs.

Let us turn to specific inflows. During June 2022, Multi-cap funds plus flexi-cap funds led the way with inflows of Rs3,482 crore. Large cap funds collected Rs2,130 crore while the large & mid cap funds saw inflows of Rs1,995 crore and mid cap funds attracted flows of Rs1,852 crore. Among others, sector funds saw inflows of Rs1,678 crore, small cap funds Rs1,616 crore, focused funds Rs1,192 crore and value funds Rs847 crore.

One parameter that tells you the story of sustainability of equity fund flows is folio accretion. Folios are MF investor accounts and give a good idea of the retail spread of demand. As of the close of June 2022, equity folios touched an all-time high of 8.95 crore out of total mutual fund folios of 13.47 crore; or 66.46% share of overall folios.

Hybrid funds see outflows, but passive flows robust

Hybrid funds saw outflows of Rs2,279 crore in June 2022. This is in contrast to the trends that we have seen in recent times. Two factors worked against hybrid funds in June 2022. Firstly, in the absence of NFOs, the popular Balanced Advantage funds saw tepid flows. Secondly, due to treasury considerations, arbitrage funds saw outflows of Rs5,593 crore. Other hybrid categories like aggressive hybrids and BAFs continued to see net positive inflows in June 2022, albeit small.

Passive fund showed no signs of relenting in June 2022, despite the absence of NFOs. It saw robust inflows of Rs13,110 crore as investors looked for lower cost alpha. The passive surge was led by index funds at Rs7,301 crore and the equity & debt index ETFs at Rs5,359 crore. Gold funds and Fund of Funds (FOFs) saw relatively smaller inflows. Passive funds are the favourites among NFOs as there are no product level limits. However, it is gratifying that these passive funds have seen robust inflows despite the drought of NFOs in June 2022.

What did we read from the June 2022 mutual fund flows story?

On an overall basis, mutual funds saw net outflows of Rs(69,853) crore in June 2022, largely on account of outflows from open-ended and close-ended debt funds; including arbitrage funds. All equity and passive fund categories saw smart inflows in June 2022. Despite the global headwinds and the domestic market volatility, the SIP flows were stable at Rs12,276 crore in June 2022. Obviously, that is not just market bravado; but a larger conviction and learning from the pandemic that those who persist with SIPs, laugh all the way to the bank.

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Equity fund flows bounce back sharply in January 2023

  • 10 Feb , 2023
  • 9:40 AM
  • For January 2023, inflows into active equity funds remained positive and surprisingly robust.

However, flows into active debt funds stayed in the negative. The redeeming feature of the month was the rebound in flows into active equity funds, which did much better in January 2023 compared to the hybrid funds and the passive fund categories too. January 2023 repeated the SIP story, touching a record level of Rs13,856 crore in the month. Secondly, new fund offerings (NFOs) were robust in January 2023 collecting Rs4,422 crore. 

The NFO flows in January 2023 were largely dominated by multi-cap funds, multi-asset allocation funds and closed ended fixed term plans (FTP). Let us quickly turn to the AUM story for January 2023. Alternate AUM includes hybrids, passives and solution funds.


Debt AUM 

(Rs trillion)

Equity AUM 

(Rs trillion)

Alternate AUM 

(Rs trillion)

Overall AUM 

(Rs trillion)


































































Data Source AMFI

The overall AUM of the mutual fund industry as of the close of January 2023 stood at Rs39.62 trillion, slightly lower than in December 2022, due to the fall in the index during the month. Here are some major takeaways.

  • The overall AUM has been in a very narrow range for the past one year. Most of the volatility in AUM has arisen from sharp swings in the equity markets coupled with sharp swings in benchmark bond yields. 

  • If you compare the AUM of active equity funds and active debt funds, there has been a complete reversal of roles over last 12 months. In January 2022, active debt had an overall AUM of Rs14.13 trillion and active equity had AUM of Rs13.38 trillion. As of January 2023, overall AUM of active debt funds has fallen to Rs12.38 trillion while AUM of active equity is up to Rs15.06 trillion. It is a complete reversal of roles; partially attributed to market contribution and partially to low yields on debt.

  • The big takeaway is that the AUM of alternate assets has moved up from Rs9.89 trillion to Rs11.87 trillion in last one year. Active fund managers struggled to beat the index, which led to investors gravitating towards passive index funds and index ETFs. However, there are signals of a turnaround in active equity fund demand in January 2023.

Let us now turn to debt mutual fund flows for January 2023.

Debt fund flows again face pressure in January 2023

In the last one year, debt fund flows have been under pressure and have actually been negative in almost all the quarters. For the month of January 2023, debt funds saw net outflows of Rs10,316 crore. The outflows have halved over December 2022, but that must be adjusted for the treasury effect. The outflows from debt funds is quite high, despite January not being a treasury adjustment month. Active debt funds have also faced pressure of flows, at the long end of the duration curve, due to excess hawkishness of the RBI and the US Federal Reserve.

Here is a summary of debt fund flows in January 2023. The funds that saw positive inflows were limited. Money Market funds saw inflows of Rs6,460 crore and ultra-short duration funds Rs1,765 crore. Other than that, inflows into long duration funds, dynamic bond funds and 10 year Gilt Funds were quite limited. Clearly, the overall flows in active debt funds were biased towards the sell side as is evident from the large net selling number. There were signs of some buying interest in long duration bonds betting that the interest cycle in India may have topped out.

We now turn to the larger universe of debt fund categories that saw outflows in January 2023. Big selling was visible in Liquid funds Rs5,042 crore, short duration Funds Rs3,859 crore, Overnight funds Rs3,688 crore, Corporate Bond Funds Rs2,333 crore, Floater funds Rs1,438 crore, Banking & PSU Funds Rs1,173 crore. In addition, debt fund categories like low duration funds and credit risk funds also saw net outflows in January 2023. With the RBI hiking rates by another 25 bps and the Fed staying hawkish, bond yields are already under stress and could put further strain on the flows into longer duration funds.

Small fund categories boost equity fund flows in January 2023

Equity fund flows in January 2023 were sharply higher at Rs12,547 crore. The big thrust to equity flows came from Rs4,422 crore of NFO flows and Rs13,856 crore of SIP flows. Now for the equity fund inflow story! During January 2023, small cap funds led the way with Rs2,256 crore of inflows. Among other key contributors, Large and mid-cap funds collected Rs1,902 crore and mid cap funds saw inflows of Rs1,628 crore while ELSS saw inflows of Rs1,415 crore. The combination of Multi-cap funds plus flexi-cap funds saw inflows of Rs2,779 crore. Other fund categories that saw meaningful inflows include sector funds at Rs903 crore, contra funds at Rs763 crore and large cap funds at Rs716 crore. All categories of equity funds saw inflows in the month of January 2023.

One parameter that tells you the story of equity fund flows very eloquently is folio accretion. Folios are MF investor accounts and give a fairly good idea of retail spread. As of the close of January 2023, equity folios touched an all-time high of 962.07 lakh folios out of total mutual fund folios of 1,428.44 lakhs; or 67.35% share of overall folios. 

Hybrid flows in January 2023 less impressive than active flows

Hybrid fund flows saw positive flows to the tune of Rs4,492 crore in January 2023; largely because of NFO flows into Aditya Birla Sun Life multi-asset allocation fund. Even arbitrage funds showed positive flows in January 2023. However, the NFOs of the highly popular Balanced Advantage Funds (BAF) is yet to pick up and that was the only hybrid category, other than equity savings funds, to see negative flows. Multi asset allocation funds saw inflows of Rs2,182 crore, largely driven by the Aditya Birla Sun Life Multi Asset Allocation NFO. Arbitrage fund saw net inflows of Rs2,055 crore in January 2023.

Passive funds did not have a very great January 2023 as the dominance of previous months was missing. Overall, passive funds saw inflows of Rs3,955 crore as investors preferred beta over alpha. What is more interesting is the gross flows into passive funds at an impressive Rs23,604 crore. The passive surge was led by index funds at Rs5,813 crore while other ETFs saw outflows of 1,709 crore in January 2023.

What we read from the January 2023 mutual fund flows?

Here is a summation of the January 2023 fund flows in three key takeaways.

  1. Equity fund flows saw a sharp turnaround as the levels of certainty and confidence among equity investors is gradually coming back.

  2. The interesting data is that the debt fund with the highest AUM as of January 2023 is bond index ETFs, which stands at Rs4.87 trillion.

  3. The active debt fund flows continue to remain tepid and that is unlikely to change till there is ambiguity over the rate trajectory.

Surge in NFOs boost equity fund flows in Dec-21

  • India Infoline News Service
  • 11 Jan , 2022
  • 1:40 PM
The story of equity flows in the month of Dec-21 was a story of NFOs. The NFO collections in Dec-21 at Rs20,616cr was more than the combined flows in the previous 3 months. However, the NFO flows in December was below the record flows of July. In the last 6 months since Jul-21, NFO flows were in excess of Rs80,000cr, largely driven by multi-cap, flexi-cap and BAF themes.

The overall AUM in Dec-21 was higher at Rs37.73 trillion on a closing AUM basis. While debt funds saw heavy outflows due to year-end treasury considerations, the flows into traditional equity funds doubled while the net inflows into passives remained extremely robust. Here is a quick look at the AUM-cum-NFO chart as of Dec-21.

Data Source: AMFI

The AUM net outflow for Dec-21 stood at Rs(4,350)cr overall due to the heavy selling in debt funds and other treasury products. The AUM mix as on 31-Dec was Income Funds (37.24%), equity funds (35.35%), hybrid funds (12.47%) and passive & solution funds (13.30%). The residual 1.65% were close-ended funds, where AUM was almost flat. This gap of 189 bps between equity fund AUM and debt fund AUM is the lowest in history. Overall AUM grew 21.63% yoy from Rs31.02 trillion to Rs37.73 trillion. In Dec-21, the share of hybrid funds has remained static but equity funds and passive funds gained AUM market share at the expense of debt funds.

Debt funds see heavy outflows in Dec-21

Debt funds overall saw outflows of Rs49,154cr, largely on account of treasury selling. This is the time, most of the quarterly pay-outs for GST and advance tax are done for which the treasury holdings are drawn down. The month of Dec-21 saw overall outflows across all the major categories of debt funds, except the overnight funds and the dynamic bond funds, which saw inflows of Rs4,731cr and Rs1,039 respectively.
There were a large number of debt fund categories that saw outflows in Dec-21 and that was largely along expected lines. Among the specific debt fund categories, Liquid Funds saw outflows of Rs8,698cr, ultra-short duration funds saw outflows of Rs8,348cr, low duration funds saw outflows of Rs11,067 crore, money market funds saw outflows of Rs7,029cr and floater funds saw outflows of Rs6,460cr.

Among other categories, Banking &PSU funds saw outflows of Rs6,219cr, corporate bond funds Rs4,306cr and short duration funds Rs2,093cr. It was not just at the short end, but even at the long end, there were concerns that the rising bond yields in the economy on account of higher inflation and Fed hawkishness could impact returns on debt.

Equity Fund inflows double in Dec-21 boosted by NFO support

Net inflows into equity funds more than doubled month-on-month to Rs25,077cr in Dec-21. Like in November, not a single category of equity funds saw outflows in Dec-21.

Data Source: AMFI

Let us turn to the inflows into equity funds in Dec-21. The inflows were across the board. Multi-cap funds plus flex-cap funds led the way with inflows of Rs12,925cr, largely supported by NFOs from Axis, HDFC and IDFC. Among other key categories, Sector Funds saw inflows of Rs3,770cr, Large Cap funds Rs1,548cr, large & mid-cap funds Rs1,635cr, mid-cap funds Rs1,679cr, focused funds Rs1,549cr and small cap funds Rs1,053cr. Other inflows were smaller. Equity funds saw cumulative net inflows of Rs110,458cr in the 10 months since Mar-21, representing 10 consecutive months of equity fund inflows.

Hybrid funds quiet, but passive funds surge in Dec-21

Net flows into hybrid funds was tepid at Rs551 crore. The balanced advantage funds, that had driven the NFO frenzy, were still in action raising Rs.3,793cr in Dec-21, largely driven by secondary inflows. However, this was more than offset by outflows of Rs4,304cr from arbitrage funds as all treasury related funds came under pressure. Other hybrid categories saw net inflows, but were relatively much smaller.
The legendary John Bogle of Vanguard had once said that investors should stop searching for the needle in the haystack and focus on the haystack instead. He was referring to index funds and it looks like Indian investors are taking Bogle seriously. In Dec-21 the passive category saw inflows of Rs18,703cr. Index funds saw smart inflows of Rs4,504cr while Debt and other ETFs saw inflows of a hefty Rs13,551cr. The other passive categories of gold ETFs and FOFs also attracted positive flows of Rs313cr and Rs334cr respectively. The hybrid, passive and solution funds, put together, account for 25.77% of overall AUM.

SIPs above Rs11,000cr for 2 months in a row

In Sep-21 the magic mark was finally crossed with net SIP flows of Rs10,351cr. That trend has been accentuated in Oct-19 with Rs10,519cr and Nov-21 with Rs11,005cr. For Dec-21 SIP flows stood at Rs11,305cr. SIPs are representative of the long term commitment of mutual fund investors and is normally seen as the ticket to long term wealth creation.

In the last 2 months, SIPs have surged despite volatile markets. That manifests an encouraging reality that people are divorcing their long term financial goals from short term market volatility. That is surely a good note to end the year 2021.


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  • 10 February, 2023 |
  • 3:03 PM

For January 2023, inflows into active equity funds remained positive and surprisingly robust.

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