When the Sensex raced past the 17,000 level and foreign funds stepped up their investments in September, mutual fund houses made some quick money by pulling out of equities. As per data available with the Securities and Exchange Board of India (Sebi), net outflows from equity investments of mutual funds were Rs 2,219 crore in the month of September.

"Many investors who had entered the markets in 2008 or early 2009 made a quick gain by exiting in the month," said Value Research CEO Dhirendra Kumar. The number of retail investors having adopted such a strategy would not be substantial, Kumar said. However, MFs reported net inflows of Rs 8,417 crore in debt instruments.

Meanwhile, average assets under management of many mutual fund houses fell in the month of September as banks and corporate houses pulled out the money they had parked with MFs. According to data from the Association of Mutual Funds of India (AMFI), HDFC Mutual Fund, country's second largest fund house lost Rs 3,447.93 crore in the month while LIC MF and SBI MF lost Rs 253.22 crore and Rs 817.31 crore in the month respectively.

"This dip in the average AUM is a cyclical factor as September being the quarter end sees redemptions by financial institutions and corporates. We were expecting a sharper decline as MF assets had gone up substantially in the preceding two months," said Kumar. On whether distributors refrained from pushing the products after the abolishment of entry load, Kumar said that was not the case in the month and October would be a normal month.

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