Page 19 - Banking Finance April 2020

MUTUAL FUND

Mahalingam said at the CII Mutual funds seek to replicate the perfor- In September 2018, the mutual fund
Fund Summit. mance of the Nifty 50 index and Nifty industry had seen outflows of Rs 2.30
Next 50 index and operate mostly in lakh after the IL&FS crisis. Market par-
Last year in September, the SEBI had the large cap space. ticipants say that typically, redemp-
brought in compulsory liquidity buffer While Nifty 50 fund will track the Nifty tions from the debt schemes occurs at
in overnight and liquid funds, where in the end of every quarter as institutions
stocks the Nifty Next 50 fund will track
funds were mandated to invest 20% in the stocks that are the next 50 by mar- such as banks and corporates redeem
liquid assets. their investments to pay for quarterly
ket capitalization after the top 50 larg-
est companies. L&T Investment Man- advance taxes. However, this time the
"Now, this is a nudge which is coming agement manages Rs 71,000-crore as- outflows were much sharper com-
from the regulator. But, what I would sets as of December 2019 and has pared to the previous few quarters due
wish is that the industry itself is going around 30 lakh folios. to the overall concern over the novel
to operate on a cycle where it actually coronavirus. “This time we saw several
is able to gauge what is going to be the Mutual Funds witness of the institutional investors redeem-
liquidity demands in a stress scenario, ing money from liquid funds and
and it is able to build up the liquidity heavy outflow in March money market funds to meet their
buffer by building up a ladder of liquid- Mutual funds has seen net outflows of short-term expenses like salary and
ity maturities," Mahalingam said. Rs 2.12 lakh crore in March 2020, wages due to the lock-down in the
which is the highest since September country,” said a head of fixed income
PGIM India rolls out its 2018. However, net inflows into equity from a leading fund house.
schemes of mutual funds remained While debt funds saw sharp outflows,
'Money Market Fund'
steadfast at Rs 11,722.74 crore de- equity funds surprised the industry as
PGIM India Mutual Fund has recently spite the sharp fall in the markets dur- it saw net inflows of Rs 11,722.74 crore
introduced its "Money Market Fund". ing the month over the spread of the in March — the highest in the current
Kumaresh Ramakrishnan, CIO-Debt novel coronavirus. financial year. Even inflows through
and Kunal Jain, Fund Manager - Debt Outflows from the mutual fund indus- systematic investment plans (SIPs)
will manage the money market fund. try were largely led by open ended stood at Rs 8,641 crore in March 2020.
The benchmark of the fund is CRISIL debt-oriented schemes, which saw net All the categories in equity-oriented
Money Market Fund Index and will in- outflows of Rs 1.94 lakh crore, shows schemes saw net inflows barring divi-
tend to generate alternate investment data from the Association of Mutual dend yield funds, which saw outflows
ways to park idle surplus funds for short Fund in India (Amfi). In March, among of Rs 29.09 crore. Multi-cap and large-
term with the investment horizon up the open-ended debt-oriented cap funds continued to see positive
to September 2020. schemes, liquid funds saw the highest flows of over Rs 2,000 crore each in
This fund thus makes a case for a bet- outflows at Rs 1.10 lakh crore followed March.
ter risk reward opportunity over other by ultra-short duration funds and Swarup Mohanty, chief executive of-
traditional alternatives in the short- money market funds which saw out- ficer of Mirae Asset Global Invest-
term space," says Kumaresh flows of Rs 29,052.98 crore and Rs ments (India), says, “Investors have
Ramakrishnan, CIO-Debt, PGIM India 27,402.30 crore respectively. A shown immense maturity in such times
Mutual Fund. Balasubramanian, managing director and are buying when they are seeing
and CEO for Aditya Birla Sun Life AMC, value in the market. They believe that
L&T Mutual Fund intro- says, “Last month redemptions in the this is a medical crises and world will
fixed income schemes were mainly find a solution to the Covid-19 and that
duces 2 Nifty index funds because of volatility in the fixed income is the reason they have continued to
L&T Mutual Fund has recently market and also the fear that the show faith in equity funds.” In March,
launched two index funds-the Nifty 50 lockdown may have liquidity issue.” He the Sensex was down by 23.05% as
index and the Nifty Next 50 index also added that debt fund flows will foreign investors pulled out money
funds. The new fund offer was closed come back to the industry in this from equity markets on the fear of the
on March 31. These open-ended index month. novel coronavirus.

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