Stock markets have been on an excellent upswing since March lows and so have been the mutual fund NAV’s of most schemes. However, with investors being unsure of this liquidity fueled moves, redemptions across equity mutual fund schemes continue unabated, for the seventh consecutive month. In January, Nifty took a break from the unrelenting rise and slid 2.5% but sectoral funds like Auto, PSU Bank, mid and small cap as well as IT delivered good gains. Pharma, energy, FMCG and realty sectors ended on the lower side.
In this newsletter, we bring you the mutual fund industry landscape, with respect to AUM, ongoing schemes, most preferred stocks by mutual fund managers, stocks bought and sold in the month, money flow, new fund offerings, and many other insights. SEBI brings about periodic changes in regulations, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. Before going into AMCs and related info, a quick look at the recent circulars issued by Securities Exchange Board of India (SEBI), with respect to mutual funds.
- Monthly Reporting of Portfolio Managers – SEBI) had mandated certain changes to the regulatory framework for portfolio managers. Portfolio managers are required tosubmit a monthly report regarding their portfolio management activity, on SEBI Intermediaries Portal within 7 working days at the end of each month, in a prescribed format. Detailed guidelines of the same are available at:
- Norms for investment and disclosure by mutual funds in Exchange Traded Commodity Derivatives(ETCDs) – In May 2019, SEBI permitted MFs to participate in ETCD’s and this month, has issued clarifications regarding cumulative gross exposure. Details are available at:
- Revision of Monthly Cumulative Report (MCR) – Pursuant to introduction of a new scheme category and to bring transparency in reporting of segregated portfolios, it has been decided to modify MCR format from January 2021 onwards. Details of the same are available at:
- Uniformity in applicability of Net Asset Value (NAV) across various schemes upon realization of funds which was supposed to come into effect from 01 January 2021, has been decided to be implemented from01 February, 2021. This has come into effect from February onwards.
Detailed guidelines mentioning the same are available at: https://www.sebi.gov.in/legal/circulars/dec-2020/circular-on-mutual-funds_48630.html
MFs & Respective AMCs Performance
As per AMFI data, average net assets under management increased from Rs. 30.96 lakh crore to Rs.31.84 lakh crore, a rise of 2.84% mainly due to rise in asset prices. SBI AMC continues to lead the AMC race, with Rs.4.85 lakh crore of net assets under management by the end of the month, followed by HDFC AMC at Rs. 4.04 lakh crore and ICICI AMC at Rs.4.02 lakh crore. Among the top 10 AMCs, there was no change in ranking for the month. As we speak, updates for IIFCL AMC, which mainly invests in debt funds, wasn’t available and hence, AUM wasn’t updated for January.
Of the 42 AMCs, ~ 98% of MF industry total AUM is accounted by 21 AMCs, comprising Rs.13.18 lakh crore of equity assets, Rs.13.98 lakh crore of debt assets, and other assets at Rs.3.31 lakh crore.
For January, MF industry witnessed a net outflow of Rs. 35,586 crores as compared to net inflow of Rs. 2,968 crores in December. This was mainly due to a net outflow of Rs. 33,408 crores from income/debt-oriented schemes. Equity funds continued their net outflows, marking it as the seventh consecutive month. The net outflow from this segment was Rs. 12,194 crores (across open and closed ended equity schemes), almost similar to the outflows seen in the months of November and December.
Let us examine each of the subcategories relating to the main categories. Among the income/debt-oriented categories, liquid funds saw the highest net outflow at Rs.45,315.69 crore compared to net inflow of Rs.5,100 crore in December.
Investors liquidated ~ Rs.9,500 crore from money market, low duration and medium duration funds but opted for short duration funds. Corporate bond funds witnessed increased net inflows at Rs. 5,428.51 crore vs. Rs. 8,609.77 crore in the previous month. RBI maintained status quo on the policy rates – repo rate at 4%, Reverse repo rate at 3.35%, Marginal standing facility and Bank rate at 4.25% to continue.
On equity-oriented funds, investors continued their relentless selling for the 7th consecutive month. The net outflow from this segment was Rs. 12,194 crores (Rs. 9253.2 crore and Rs. 2941 crore across open and closed ended equity schemes respectively), almost similar to the outflows seen in the months of November and December. Since July 2020, equity schemes have been under constant pressure due to higher redemptions by retail investors, owing to a below expectation return performance in earlier years. Also, investors seem to believe that the buoyant stock market conditions are favorable for investing directly into equities as compared to mutual funds. Barring multi-cap funds which were recently advised by SEBI to stay true to their objective, only Thematic funds witnessed any positive net flows.
After facing redemptions of more than Rs. 53,000 crores in the previous calendar year, hybrid funds saw some respite, with investors opting for arbitrage funds. With net inflows of Rs. 5,234.86 crore into arbitrage schemes, this category turned positive for the month in terms of net flows, countering the heavy outflows from balanced and aggressive hybrid schemes.
Other ETFs category inflow was still buoyant at Rs.6,133.21 crores vs. Rs. 6,831.84 crores in December, while Gold ETFs were positive at Rs.624.87 crore, continuing with the positive inflow of Rs. 430 crores in previous month.
For the financial year 2020 as a whole, across open and closed ended schemes, the monthly net flows indicate a negative trend for equities and hybrid schemes, barring index funds and other ETFs. In the 10 months of this year, almost 54,000 crores of net outflows can be seen in the above-mentioned categories. Increase in stock prices and inflows into debt-oriented schemes have kept the assets under management at a higher level.
Overall, for FY21, the net inflows stand at Rs. 2.4 lakh crore.
SIP flows (after normalization in December flows) continued to be in the same trend, clocking Rs. 8,023 crores on a month on month basis. For FY21 as a whole, SIP contribution accounted for Rs. 79,370 crores.
Gross new SIP folio additions stood at 16.44 lakh with net addition at 8.49 lakh. Total number of outstanding SIP accounts stand at 3.55 crore and SIP AUM at Rs.3.9 lakh crore.
In terms of detailed insights related to mutual fund schemes, given below are top 30 stocks held by all schemes across all AMCs, along with number of shares, holding value at market rate as of 31 January, followed by number of schemes holding it as a percentage of their AUM.
Mutual fund managers continue to churn their portfolios, moving from growth stocks with over stretched valuations to value stocks. A look at the top 30 stocks where MFs increased their exposure in January:
Top 30 stocks where fund managers reduced their exposure during the month are:
Based on changes in fundamentals or news flow of a company, fund managers buy and sell large volume of stocks. After an extensive research, top 30 stocks which were bought or sold in large volumes were collated and are being presented for the benefit of investors.
Similar to the above compilation, large volume of stocks which were sold by all mutual funds collectively in January are:
These insights from the data and analysis would surely help investors in understanding mutual fund industry better, and play a pivotal part in direct equity investing too. FYERS Direct team continues its research to bring every investor, the best of information and insights, and help converting them into actionable items supporting their investments. All through the month, FYERS research team will share information that clients can benefit from, at our twitter handle and by the 15th of every month, the newsletter will be made available on our website.
A excel workbook is made available to readers each month, highlighting all the schemes across equity, debt, hybrid, index and ETFs, their NAVs, minimum investment amounts, AUMs, expense ratios, exit loads, risk ratios as well as returns – absolute, annualized and calendar returns.
Hope investors make the best use of data, analysis and insights at hand, to further their journey of investment building with FYERS Direct Mutual Funds.
Stay Safe and Happy Investing!
A data maverick on the loose! 24/7 research, analyzing the stock market upside down and from the inside out. His vast educational accomplishments and 2 decades of in-depth experience from the corporate world helps to join the dots when it comes to investing in stocks. You can expect well-researched themes/portfolios, not stock tips!