Truth Speaker Mitra (@SubhajitMitra) 205 Followers 02 Nov

Investment 673 3

Red flag for debt fund investment ahead of US recession bell— ₹65k cr outflow only September

Debt funds that specialise in investing in fixed-income securities saw an outflow of 65k crore rupees in September as a result of rising interest rates and corporate redemptions to pay advance tax.

Data from the Amfi showed that there had been net inflows of ₹49k crores in August and roughly ₹5k crores in July prior to this.

Prior to that, due to excessive inflation and an increasing rate cycle, investors withdrew more than ₹70,000 crore from debt mutual funds in April and June.

Investors are likely moving away from debt markets in favour of equity markets due to the environment of rising interest rates that have been in place since May 2022.

Money market funds of ₹11k crore) and very short-term funds nearby ₹60k crore witnessed the most outflows in this category, respectively (₹8k crore).

Another element that might have had an impact on the flows into debt funds is the withdrawal by institutions to meet their obligations for paying advance taxes.

The Federal borrowing rates hiking trend followed by RBI make this volatility.

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