Mutual funds sell equities worth Rs. 1.29 trillion in FY21

Domestic mutual funds sold shares worth Rs. 1.29 trillion in FY21 – the most in a decade – even as stock markets rallied to record highs during the year amid a gush in foreign liquidity inflows.

Data from SEBI showed that the year witnessed high redemption from equity mutual funds as new retail investors took to investing in equities directly.

Anand Vardarajan, Business Head, Banking, Alternate Products and Product Strategy, Tata Asset Management Ltd., said, “Equity as an asset class did extremely well in the last financial year with the Sensex clocking almost 68% return. Low expectations, cheap valuations and global liquidity led to a market rally.”

“However, investor sentiment was not very upbeat and they took an approach of sell on rally. In equities, there is a tendency to sit over one’s losses but trim gains. Usually, it is big returns or quick returns. FY21 was a rare year when it was big and quick, and investors perhaps chose to pocket that and, hence, the net outflows,” he further added.

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