Net outflow from income and debt-oriented schemes stood at Rs 33,408.76 crore for the month January 2021 as against an inflow of Rs 13,862.77 crore recorded in December 2020.

According to data released by the Association of Mutual Funds in India (AMFI), liquid funds under debt schemes witnessed a massive outflow of Rs 45,315.69 in January 2021 as compared to the net inflow of Rs 5,102.22 in December 2020.

“The outflow from the category could be a result of these businesses pulling their money out for meeting liquidity requirement at the start of the year. Liquid funds are typically used by many businesses to park their money for a short period of time,” Himanshu Srivastava, Associate Director – Manager Research, Morningstar India, says referring to fixed income funds.

Other categories such as low-duration funds, money market funds, medium to long duration funds, long duration funds and gilt funds also witnessed outflow in January. Some of the debt categories like corporate bond funds, banking and public sector undertakings (PSUs) funds, short duration funds registered new inflows.

“Owing to regulatory measures to ease liquidity, and also the stance to hold on to the policy rates, some of the debt categories like corporate bond funds, banking and PSU funds, and short duration funds have seen positive flows. Even credit risk funds are now moving into positive flows, given that the risk-return dynamics is working in favour of retail investors,” says NS Venkatesh, Chief Executive at AMFI.

With a net inflow of Rs 6,892.63 crore, the short duration funds category was the biggest beneficiary, followed by corporate bonds, which garnered received Rs 5,428.51 crore during the month.

“While the funds from the corporate bond category are relatively safer investment options, given limited scope to take credit bets, many funds from the short duration category too play a relatively cautious investment approach,” says Srivastava.

Growth and equity oriented mutual funds saw net outflows for the seventh month in a row. It stood at Rs 9,253.22 crore in January 2021 as compared to Rs 10,147.12 crore a month ago, which is lower but still continues to be on higher side. Market experts attribute the continuation of net outflows from equity funds to profit-booking by investors.

The overall assets under management (AUM) stood at Rs 30,50,130.04 crore in January as compared to Rs 29,47,396.46 crore in December 2020, up by 3 per cent. Total amount collected through systematic investment plans (SIPs) reached Rs 8,418.11 crore last month, as against Rs 8,023.39 crore in the month before.