Debt mutual funds recorded net inflows of ₹1.13 lakh crore in October, reversing the net outflows of ₹1.83 lakh crore witnessed in September, according to the latest monthly data released by the Association of Mutual Funds in India (AMFI).
The reversal represented a swing of nearly ₹2.97 lakh crore in net flows month-on-month, with liquid and overnight funds accounting for the bulk of October’s inflows.
Liquid funds attracted net inflows of ₹70,534 crore during the month, while overnight funds saw inflows of ₹54,893 crore. Money market funds added another ₹1,502 crore.
The turnaround in debt fund flows came with the beginning of a new quarter, following significant quarter-end outflows in September.
Corporate bond, short-duration funds continue to see outflows
Despite the overall recovery in debt fund flows, some categories continued to witness net outflows in October.
Corporate bond funds recorded the highest outflows among these categories at ₹3,143 crore, followed by short-duration funds at ₹2,093 crore and banking and PSU debt funds at ₹1,238 crore.
Ultra-short-duration funds saw outflows of ₹1,879 crore, while low-duration funds recorded net outflows of ₹3,582 crore.
Commenting on the October mutual fund data, Neeraj Jain, Fund Manager – Fixed Income at The Wealth Company Mutual Fund, said debt fund flows reversed seasonally with the start of a new quarter after quarter-end outflows in September.
He said higher crude oil prices, the Reserve Bank of India’s rate hike and tighter liquidity conditions following the easing of FCNR(B) inflows had pushed domestic bond yields higher across the yield curve.
Nitin Agrawal, CEO, Mutual Funds at InCred Money, described the reversal in debt fund flows as a normalisation in institutional cash management after the significant outflows seen in September.
Agrawal said the reversal was driven by institutional cash management normalisation, while the broader October mutual fund data reflected a recalibration in investor allocations across asset classes.
Meanwhile, the mutual fund industry’s total assets under management (AUM) increased to ₹83.39 lakh crore in October from ₹82.64 lakh crore in September.
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