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Liquid funds seeing an outflow is a regular phenomenon, says Kotak Mahindra AMC

Liquid funds witnessing an outflow is a regular phenomenon, said Nilesh Shah, managing director, Kotak Mahindra AMC, after the data from Association of Mutual Funds in India (AMFI) showed that the mutual fund industry saw the highest outflows of Rs 1.5 lakh crore among income and debt schemes in June.
“So whatever money has gone out on June 30, majority of that has come back into liquid funds. The industry is good at handling this kind of volatile cash flow," he said in an interview with CNBC-TV18.
The data for June shows that inflow into equity mutual funds was up nearly 53 percent during the month. However, the systematic investment plan (SIP) flows have been steady, to the tune of Rs 8,100 crore in June compared to an average of Rs 80,00- Rs 8,200 crore in the preceding three months.
According to Shah, equity inflows have also started stabilising. There was a dip in equity inflows in the first half of current year but for the last two months, they have started stabilising, he said.
“Despite two years of SIP returns turning negative in small and midcap funds, people are still continuing their SIPs. That shows the maturity of investors where they are willing to invest for the longer-term and are willing to buy more when markets are cheaper,” Shah added.
When asked if one would see more money going into debt funds, he said, “Today the average guild fund returns are in double-digits and despite that, the fund sizes are at the lowest level. In fixed income, investor prefers stable return than volatile returns and unlike bank fixed deposits where there is no mark to market in mutual funds, we have a reasonable transparent mark to market. So, despite returns, I don’t see demand coming in from retail investors into volatile fixed income products."