Debt-oriented funds have experienced a substantial shift in investor sentiment in October. After enduring two consecutive months of net outflows, these funds rebounded with an inflow of ₹42,634 crore, compared to outflows of the same amount in September, according to Association of Mutual Funds in India (AMFI) data.

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The key contributor to this surge in inflows was the liquid fund category, which saw a significant revival, said Nehal Meshram, Senior Analyst, Manager Research at Morningstar Investment Adviser India.

Liquid funds, which had grappled with massive outflows amounting to ₹74,177 crore in September, turned the tide and recorded net inflow of ₹32,964 crore in October.

Moreover, October brought positive news for many debt categories, with the exception of overnight funds, low duration funds, medium duration funds, credit risk funds, and banking and PSU funds, which continued to face outflows. Investors displayed notable interest in government papers.

"This could be attributed to investors opting to invest in government papers offering attractive yields in anticipation of a change in interest rate cycle in future," Meshram said.

It's worth noting that overnight funds, which had witnessed a net outflow of ₹1,274.42 crore in September, saw a notable reversal, with an outflow of ₹3,444.80 crore in October. This data suggests that investors may have re-evaluated their investment strategies and reallocated their assets, leading to the significant changes in fund flows, experts say.

First Published:Nov 9, 2023 5:41 PM IST