The general outflows from the equity markets appear to have hit mutual funds (MFs) as well with the industry witnessing record outflows in July, the highest in several months.
But, experts are unanimous that MFs still offer value for money for the individual investor and are still the best bet for making money in volatile times.
Investors pulled out a net amount of more than Rs 50,000 crore from various MF schemes in July, the highest outflow in five months.
The huge pullout of funds during July followed a net withdrawal of Rs 48,403 crore in the preceding month, taking the total outflows for two consecutive months to close to Rs 1 lakh crore, according to agencies.
As per the latest data available with market regulator, the Securities and Exchange Board of India (Sebi), the net outflow of Rs 50,067 crore during July was the highest withdrawal by investors in MF schemes in a single month since March, when investors had redeemed Rs 1.08 lakh crore.
Experts however are firm that this is a short-term aberration rather than a long-term fall.
“We have been seeing outflows mainly from equity-linked funds,” says Vidya Bala, head of mutual funds research, FundsIndia.com. Thus, funds are getting shifted to debt funds. The trend is not new and is noticed in every bear market where people pull out money.
“In picking value, investors may have a difficult choice to make and they should ideally leave it to the fund house,” says Bala.