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Mutual funds are facing heavy redemption pressure. A whopping Rs 14,624 crore have been pulled out of the equity mutual funds in the past five months.The mutual fund industry is gearing up to face yet another round of redemption in the month of October. September alone saw an outflow of Rs 7000 crore from equity mutual funds, which was twice as much as what the industry expected.
Sanjay Sinha, CEO, L&T Mutual Fund, said, ?The markets were high in September. The investors pressed the panic button and opted to cash out on their appreciation. A substantial part is taken out in September. A natural redemption is expected in October too. Patch if the trend continues at this pace, then there is a cause for worrying.?
Sethuram Iyer, CIO, Shinsei Asset Management, said, ?There will be some more redemption as pressure is happening at the peak of the market. People would want to exit at this peak.?
Mutual funds have sold Rs 2,572.5 crore worth of shares in the first 10 days of October alone. This is the highest net sellout so far this year. Earlier months saw net selling between Rs 800 crore and Rs 1,400 crore.
Experts say that higher selling this month indicates the redemption pressure has not yet eased.
While the mutual fund industry fears another month of heavy redemptions, fund managers are hopeful of retail investors finding their way back into the equity markets.
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