Equity MFs reap mkt boom in Dec

Coimbatore: Investors of equity mutual funds (MFs) continue to cash in on the buoyancy in markets as redemptions stood at Rs 6,232 crore in December, the second highest in nearly two years. 

    The equity MFs registered net outflows for the fifth consecutive month, which have come to Rs 7,315 crore since August, data with the Association of Mutual Funds in India (AMFI) shows. Net outflows touched Rs 2,185 crore in December, the highest in 2009. 
    "A large number of investors who came in when the sensex moved towards the 21,000-levels have booked profits," says Jaideep Bhattacharya, chief marketing officer, UTI MF. "Inflows (into equity schemes) are quite muted now," he says. 
    "Most people, including those who made investments (when sensex was) at the 20,000-levels, have recovered their losses and are pulling out money," says Vikram Kaushal, head, retail sales and distribution, ICICI Prudential MF. 
    Many investors of equity schemes believe that the markets have risen too fast in a short period and are waiting on the sidelines to see how they evolve before committing fresh money, say industry officials. 
    With large pullouts, net inflows into equity schemes stood at a mere Rs 117 crore for March-December 2009 compared to Rs 1,254 crore during the same period the previous year, AMFI data shows. The MF industry added 10,000 folios in December, a mere 0.2% improvement over the previous month, industry officials estimate. 
    "New systematic investment plans (SIP registrations) are quite flat. We need more efforts on the distribution side," says Kaushal. The focus should be on bringing regular inflows through SIPs, industry officials say. "We have to find ways to get larger retail participation and bring more investors from smaller cities," says Bhattacharya. 
    Sales from existing equity MFs are hovering around Rs 4,000 crore for the past five months after surging to a peak of Rs 8,737 crore in July when the industry went all out to get more investors before the ban on entry loads came into effect. Walking Away With Cash 
December 2009 Redemptions: Rs 6,232 cr Net outflows: Rs 2,185 cr Net inflows in Mar-Dec 2009: Rs 117 cr 2008: Rs 1,254 cr