Debt mutual funds witnessed an outflow to the tune of ₹1.2 crore in March 2022 with massive withdrawals in liquid, short duration, and corporate bond funds segments, as per reports. With this, the net outflow from the category reached ₹68,471 crore in 2021-22 as compared to a net inflow of ₹2.3 lakh crore last fiscal.
Out of the 16 fixed-income or debt fund categories, 15 witnessed net outflows during the quarter ended March 2022. Only the overnight fund segment saw a fund infusion of ₹7,802 crore during the quarter under review, a Morningstar India report said on Monday. The category saw net outflows to the tune of ₹1.15 lakh crore in March, and ₹8,274 crore in February, whereas January saw net inflows of ₹5,087 crore.
The category had registered an infusion of ₹21,277 crore in the December 2021 quarter.
“Typically, the last quarter of a fiscal year always has net outflows in the open-end fixed-income category as a lot of funds get withdrawn by institutional investors from categories like liquid, ultra short term, money market, and so on for payment of taxes,” Morningstar India said.
The liquid, ultrashort-term, money market and overnight fund categories form about 50% of the debt fund category. Given its significant contribution, even a slight change in the quantum of flows in percentage terms can make a huge difference in the overall flows within the category.
Generally, debt funds are considered to be less risky, with investors taking comfort in being able to hedge their risks by parking hard-earned money in instruments that provide better returns than bank fixed deposits.
On the other hand, investors pumped ₹63,057 crore in equity mutual funds during the quarter ended March 2022 even as the broader market witnessed heavy volatility amid a deteriorating geopolitical environment following Russia’s invasion of Ukraine.
Overall, mutual funds saw net outflows to the tune of ₹3,900 crore during the fourth quarter of 2021-22. In the previous quarter, net inflows stood at ₹81,915 crore.