Debt-oriented mutual funds saw a robust recovery in October as inflows touched Rs 1.57 lakh crore. This infusion was driven by investments in liquid schemes. The positive inflow enhanced the asset base of debt mutual funds by 11 per cent to touch Rs 16.64 lakh crore in October end, in comparison to Rs 14.97 lakh crore clocked during the same period a year earlier.
The data from the Association of Mutual Funds of India (Amfi) showed that in September, the debt mutual funds saw an outflow of Rs 1.14 lakh crore, reported PTI. About 14 out of 16 debt funds categories logged net inflows during the period under review, while medium duration and credit risk funds managed their trend of regular outflows.
Within debt funds, liquid funds dominated in the inflows with investments at Rs 83,863 crore and accounted for 53 per cent of the overall flow. Meanwhile, overnight funds and money market funds reported infusion worth Rs 25,784 crore and Rs 25,303 crore respectively.
Nehal Meshram, Senior Analyst, Manager Research, Morningstar Investment Research India, noted, “Corporates typically channel surplus funds into liquid and money market funds post-tax settlements in September, reflecting a preference for these low-risk, highly liquid options.”
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Notably, expectations of a rate cut have brought in more interest in active duration strategies. These funds are positioned to gain from possible decline in interest rates. In October, gilt funds clocked an inflow of Rs 1,375 crore, meanwhile long-duration bonds saw inflows worth Rs 1,117 crore.
The equity-oriented mutual funds also logged an inflow of a record Rs 41,887 crore during the period under review. Collectively, the mutual fund industry registered an inflow of Rs 2.4 lakh crore in October, in comparison to an outflow of Rs 71,114 crore recorded in the preceding month. The huge inflow was attributed to investments in the debt schemes.