<p>Debt-oriented mutual fund schemes witnessed a withdrawal of Rs 25,872 crore last month after a stunning influx in July as investors continued to take a cautious approach in light of the present interest rate environment in the US.<img decoding=”async” class=”alignnone wp-image-192044″ src=”https://www.theindiaprint.com/wp-content/uploads/2023/09/theindiaprint.com-investors-take-a-cautious-attitude-in-august-debt-mutual-funds-had-outflows-of-rs-.jpg” alt=”theindiaprint.com investors take a cautious attitude in august debt mutual funds had outflows of rs” width=”1295″ height=”971″ srcset=”https://www.theindiaprint.com/wp-content/uploads/2023/09/theindiaprint.com-investors-take-a-cautious-attitude-in-august-debt-mutual-funds-had-outflows-of-rs-.jpg 720w, https://www.theindiaprint.com/wp-content/uploads/2023/09/theindiaprint.com-investors-take-a-cautious-attitude-in-august-debt-mutual-funds-had-outflows-of-rs–150×113.jpg 150w” sizes=”(max-width: 1295px) 100vw, 1295px” title=”Investors take a cautious attitude; in August, debt mutual funds had outflows of Rs 25,872 crore 3″></p>
<p>Nine of the 16 debt categories under examination had net withdrawals during the reviewed month, according to statistics from the Association of Mutual Funds in India (Amfi).</p>
<p>The categories with a profile of less than a year, such as liquid, extremely short, and low duration, had the greatest amount of net outflows. Significant net outflows were also seen in the banking and PSU categories.</p>
<p>The data shows that there was a net outflow of Rs 25,872 crore from debt mutual funds in August as opposed to a net inflow of Rs 61,440 crore in July.</p>
<p>It seems that many investors are still taking a cautious approach and delaying making investment choices in light of the present interest rate environment and uncertainty on the trajectory of interest rates in the nation. Additionally, a surge in the stock markets may have encouraged investors to switch their attention from debt to equities, according to Melvyn Santarita, an analyst at Morningstar India.</p>
<p>Assets under management (AUM) of fixed income funds or debt funds fell to Rs 14 lakh crore at the end of August from Rs 14.17 lakh crore at the month’s end due to the significant outflow.</p>
<p>In terms of categories, there was a Rs 26,824 crore outflow from liquid funds, followed by Rs 4,123 crore from ultra-short duration funds and Rs 985 crore from banks and PSU funds.</p>
<p>Another group of investors, on the other hand, decided to take a chance. A portion of investors bought in classes like Gilt Funds, Dynamic Bond Funds, and Long Duration Funds in anticipation of a shift in the interest rate cycle, he added, which stands to gain if the cycle reverses.</p>
<p>“These categories may see increased flows as and when there is greater certainty on the beginning of the interest rate decrease cycle. Investors should keep this in mind when investing in these products since they pose relatively substantial interest rate risks, he noted.</p>
<p>A total of Rs 3,158 crore were invested in overnight funds, followed by Rs 2,325 crore in floater funds, Rs 1,755 crore in corporate bond funds, and Rs 255 crore in gilt funds.</p>
<p>The flexibility of floater funds to change depending on the current interest rate environment may be the reason for the inflow of these funds.</p>
<p> </p>
