Mutual Fund Agent: Investors Pulling Out of Debt Mutual Funds?

Mutual Fund Agent: Investors Pulling Out of Debt Mutual Funds?

According to a news report in the Business Standard, close to Rs. 70,000 crores have been pulled out of the debt mutual fund industry as of 21st August 2022.

Experts are assuming that this trend will continue into the quarter ending September. There will be lower system liquidity and higher regulatory rates, both of which can affect the corpus for debt mutual funds.

However, Money Assist, a mutual fund agent in Kolkata, has NOT noticed a steady outflow of investment from debt mutual funds. There has been no major or mass exit from debt mutual funds or any preference as such for equity.

The reader should note that the interest rates in the USA have increased, prompting the Indian government to also increase domestic interest rates. Hence, these need to stabilise so that people begin to invest again in debt mutual funds in the upcoming quarter beginning October.

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As you may already know, the higher the interest rate, the lower the bond prices. These two factors are inversely related. When interest rates rise, bond prices fall and vice versa.

Hence, investors are now interested in the newer debt securities and redeeming their old ones. However, mutual fund agent, Money Assist hasn’t seen any such change in Kolkata.

What’s the real situation like?

  • There has been a decrease of 5% of the assets managed by fund managers in the debt mutual fund market.
  • The debt mutual fund asset base hit a peak of Rs. 14.16 crore in the first quarter of the year. Since then the asset base has fallen by 13%. 
  • Investors are pulling out of fixed income funds due to liquidity requirements and to protect their capital.
  • Heavy withdrawal of funds has been seen from segments such as PSUs, low duration funds, short duration funds, corporate bond funds, and banking funds.
  • Liquid funds, 10-year gilt funds and long-duration funds witnessed an inflow.

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Why do investors opt for debt mutual funds?

Investors opt for debt mutual funds because they are considered a less risky option when compared to equity mutual funds. They also give better returns than bank fixed deposits, which leads people to park their hard-earned money in them. This mutual fund agent believes that the draw of equity is upon the people, as it will help them achieve their goals on time.


So, in conclusion, this mutual fund agent advises you to wait until the interest rates stabilize before you consider investing in debt mutual funds. Equity, however, seems like the better option for a while now. If you wish to invest in mutual funds do get in touch with us at Money Assist.