Why investors are staying away from equity MFs ?
Published On: Wednesday, February 10, 2021 | By: Team KnowMyStock
Despite a strong rally in the market, investors have pulled out money from mutual funds for the seventh straight month in January. According to the recent data by the Association of Mutual Funds in India (Amfi), equity mutual funds have witnessed net outflows of Rs 9,253 crore last month, taking the total outflows to Rs 42,200 crore since July. While the pace of outflows has peaked since November, when investors had redeemed investments worth Rs 12,917 crore, the phenomenon continues on Dalal Street. This is when BSE barometer Sensex has rallied 32 percent between July 2020 and January 2021. Some might argue that a sharp rally in the markets is what has persuaded investors to take money off the table and re-enter at a more opportune time, but analysts don't believe the reason to be this straight forward. Analysts believe lack of a decent performance by mutual funds over the last 3-4 years is one crucial factor why investors are fleeing from equity funds.
While the coronavirus pandemic-led lockdown hurt the markets badly, many retail investors saw it as an opportunity to use the time to study the stocks and invest. Between January 2020 and January 2021, a total of 1.06 crore new Demat accounts have become operational, shows data available with CDSL.Experts beleave that many of these new Demat accounts would have also belonged to investors that put money in mutual funds in the past.It is very much possible that they would have withdrawn their investments from mutual funds and invested directly in the markets.
Tags: mutual funds
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