Debt Funds See Significant Outflow Amid Market Volatility

In February, debt-oriented mutual funds experienced a significant outflow of Rs 6,525 crore, reversing the strong inflow witnessed in January. While most categories saw redemptions, liquid and corporate bond funds recorded inflows. Market watchers expect situation stabilization as investors anticipate future interest rate cuts and market shifts.

In a surprising turn of events, debt-oriented mutual funds in India faced a major outflow of Rs 6,525 crore in February, compared to a robust inflow of Rs 1.28 lakh crore in January, according to data from the Association of Mutual Funds in India (Amfi).

Despite the short-term adverse trend, industry experts suggest that debt mutual funds remain critical components of investment portfolios. Nehal Meshram from Morningstar Investment Research India noted that market conditions are expected to stabilize, potentially leading to renewed investor interest.

Interestingly, while redemptions prevailed in most categories, liquid funds and corporate bond funds emerged as rare exceptions, attracting Rs 4,977 crore and Rs 1,065 crore, respectively. This indicates investor confidence in specific sectors despite overall market volatility, which has also led to decreased inflows in equity mutual funds.

(With inputs from agencies.)