The Economic Times
English EditionEnglish Editionहिन्दी
| E-Paper
Search
+

    Domestic mutual funds report higher redemption in December

    Synopsis

    The domestic mutual funds are witnessing rising redemption pressure at a time when the equity indices are trading at record levels.

    Getty Images
    The domestic mutual funds are witnessing rising redemption pressure at a time when the equity indices are trading at record levels. Their three-month rolling average of equities sold reached to ₹71,680 crore in December 2020, the highest since the data was first made available by the Securities and Exchange Board of India in 1999. It includes exposure of equity funds, index funds, exchange-traded funds and balance funds.

    The profit booking in several funds due to double-digit returns and outflow from several small to medium funds due to rebalancing aggravated the redemption pressure. The balance funds, which are supposed to be all-weather funds, have seen outflow in every month of 2020.

    The domestic funds pruned their exposure in the quality stocks such as Infosys, TCS, Wipro and HDFC Bank in the December quarter, data from the BSE show.

    Things You should consider
    • Annualized Return
      for 3 year: 8.93%
    • Suggested Investment
      Horizon: >3 years
    • Time taken to double
      money: N.A
    The domestic funds managed equity assets worth ₹13.9 lakh crore in December 2020, accounting for 15.7% of the total assets under management by institutional investors, according to the NSDL data. They were net sellers in the equities segment in December for the seventh month in row. Since March 2020, the domestic funds have sold nearly ₹1.1 lakh crore worth of equities, while foreign portfolio investors have pumped in close to ₹1.9 lakh crore into Indian equities.

    The ratio of gross purchase and gross redemption, which captures redemption pressure — dropped to 0.61-0.69 in the two months to December 2020, the lowest since the global financial crisis in 2008. The ratio averaged 1.06 in the last twelve years.

    new paperET Bureau

    ( Originally published on Jan 18, 2021 )
    (Catch all the latest news about mutual funds, MF insights & analysis, best buys and investment trends on ETMutualFunds.com)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    1 Comment on this Story

    Bijul Desai42 days ago
    Domestic investors should book profits ...if not all sell some portion..
    The Economic Times