Resurgence in Fixed-Income Mutual Funds: October Sees Robust Inflows

Fixed-income mutual funds observed a significant recovery in October, with Rs 1.6 lakh crore net inflows, primarily into liquid and overnight funds. This contrasts with September's Rs 1.02 lakh crore outflows. The assets under management have grown by nearly 10% to Rs 19.51 lakh crore, with future flows expected in short-term categories.

In a striking recovery, fixed-income mutual funds attracted a net inflow of Rs 1.6 lakh crore in October, reversing the Rs 1.02 lakh crore outflow recorded in September. This surge was primarily driven by robust inflows into liquid and overnight funds, according to the latest data from the Association of Mutual Funds in India (Amfi).

The renewed interest has elevated the assets under management of debt-oriented mutual funds by almost 10 percent, reaching Rs 19.51 lakh crore by the end of October, up from Rs 17.8 lakh crore in September. Analysts suggest that fund flows will likely focus on liquid, money market, and high-quality accrual categories as investors await clearer insights into future rate cuts.

Among various segments, liquid funds led the charge with a staggering Rs 89,375 crore inflows. Meanwhile, overnight funds attracted Rs 24,051 crore, marking increased short-term treasury deployments. While ultra-short and low-duration funds significantly rebounded, credit risk funds remained underwhelming, reflecting cautious investor sentiment towards lower-rated options.

(With inputs from agencies.)