The redemption pressure on local funds eased in March. The domestic mutual funds turned net buyers during the month with investment worth Rs 2,476 crore after remaining net sellers in the previous nine months, according to the data from SEBI. This includes exposure to equity funds, index funds, exchange traded funds (ETFs), and balanced funds for trades in the secondary market.
The gross purchase by the local funds rose to Rs 76,583 crore in March, the highest in the past 12 months. There were only five instances since 2008 when gross equity purchase of the local funds crossed Rs 75,000 crore in a single month.
The gross purchase-sales ratio for local funds in the equity segment was one in March 2021, in line with the long-term average. Local funds sold equity worth Rs 1.2 lakh crore between June 2020 and February 2021, nearly half of the net inflow by foreign investors. The local equity funds reported net outflow in each month since July 2020 with cumulative outflow at Rs 46,791 crore. The SIP (systematic investment plan) book has cumulative inflow of Rs 62,482 crore during the period, according to AMFI data. It suggests that redemption pressure has been primarily driven by the lumpsum investment category. The continued selling by the domestic funds shrunk the share of AUM in the total institutional AUM to 15.8% in February 2021, 106 basis points lower year-on-year.
Local funds had assets under management (AUM) of Rs 14.6 lakh crore at the end of February, of which 65% was of pure equity funds followed by nearly 19% of index funds and ETFs and remaining by balanced and arbitrage funds.