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Equity MFs redemptions increase to Rs. 33.06 billion in Sept

Investors have been redeeming their mutual fund schemes for a fourth month in a row

October 08, 2012 3:59 IST | India Infoline News Service
According to Association of Mutual Funds in India (AMFI) data, net redemptions from equity mutual funds increased to Rs. 33.06 billion in September 2012, as retail investors sold their schemes after a strong rally in stock markets.

Investors have been redeeming their mutual fund schemes for a fourth month in a row. Redemption in funds increased despite equity schemes registering their best returns in September 2012. Retail investors offloaded bulk of their investment which they had invested in equity schemes in 2007-08.

September's outflows bring equity withdrawals to Rs. 96.73 billion, the second time in three years when redemptions could outpace new investments.

The benchmark Sensex has gained about 22% this year. The rally has been driven by foreign institutional investors, who have bought a net Rs. 857.1 billion in Indian stocks, after being sellers in 2011. On the other hand, Indian fund managers are struggling with falling domestic equity investments.

Asset management companies (AMCs) annual reports indicate that most of India's fund houses are not making profits. The industry is also constrained by tough regulations and stiff 'know your customer' rules that make opening funds for retail investors complicated in India.

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