Will investors continue to exit from equity funds?

December 9, 2020

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The month of November 2020 witnessed one of the higher level of outflows from equity funds (Rs 1.7 billion; net outflows). Analysts believe it is because investors are seeing schemes NAVs recover and are taking money off the table

Equity mutual fund (MF) schemes saw their worst monthly outflows from Stock Market in November – to the tune of Rs. 1.7 billion(net selling). This is the first month since July that equity schemes have witnessed net outflows, data from NCCPL shows.

Gross Buy from equity funds stood at Rs 15 billion , while Gross selling stood at Rs 16.7 billion primarily driven by redemptions from Fund Investors and Fund managers focus on realizing the gains.

Mutual fund analysts say that the large size of withdrawals indicate that investors are not certain of a continued market rally, but are more interested in realizing gains at current levels.

“These Mutual Funds selling can be attributed to tohose funds who have underperformed stock market benchmark index for several months. Investors are seeing the recent market move as a relief rally and taking money off the table,” says an official of a mutual fund, requesting anonymity.

“Analysts are of the view that Mutual Funds selling in the stock market may continue over the next few months as investors are not seeing the net asset values (NAVs) of their funds return to higher levels which were witnessed previously. Investors are not yet bullish on economic recovery and want to protect their capital”, says Adnan Syed Editor of Financial Markets Desk at Business Tribune PK.