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AUM surpasses INR28t+ to achieve another milestone; Equities continue to see outflows

Key observations

After reaching a landmark INR27t for the first time last year, domestic mutual fund (MF) industry AUM has achieved another milestone of INR28t. Encouragingly, the MF industry has come a long way in the last decade, with AUM rising a staggering 4.4x to INR28.2t in Oct’20 from INR6.5t in Oct’10.

Total AUM of the MF industry crossed the INR28t mark for the first time to reach INR28.2t in Oct’20 (+5.1% MoM), mainly led by income, liquid, and equity funds. Notably, AUM was up MoM across categories.

Equity AUM (incl. ELSS and index funds) of domestic MFs increased 1.6% MoM to INR8.2t in Oct’20. This was on account of a rise in market indices (Nifty +3.5% MoM) and marginal increase in the sales of equity schemes (up 2.1% MoM to INR183b). At the same time, redemptions increased 19.9% MoM to INR222b – the highest in 31 months. This led to net outflows of INR39b in Oct’20, marking the fourth consecutive month of outflows.

Investors continued to park money in mutual funds, with gross inflows and the contribution of systematic investment plans (SIPs) remaining stable at INR78b in Oct’20.

Some interesting facts

* Oct’20 saw notable change in the sector and stock allocation of funds. On an MoM basis, the weights of Private Banks, Technology, Cement, NBFCs, and Telecom increased, while the weights of Oil & Gas, Consumer, Healthcare, Automobile, Capital Goods, Metals, Chemicals, and Media moderated.

* Private Banks’ weight – after hitting a 29-month low in Sep’20 to 15.8% – saw a positive interest among MFs and was up 160bp MoM to 17.4%

* Technology’s continue to scale new high as the weight increased 20bp MoM to 11.8%.

* Consumer’s weight moderated for the fifth consecutive month to reach 8.3% (-40bp MoM). As a result, the sector slipped to the fifth position in MF allocation, making way for the Healthcare sector in the fourth position.

* In terms of MoM value increase, the Top-5 stocks were from Private Financials – ICICI Bank (+INR57b), HDFC Bank (+INR53.9b), Kotak Mah Bank (+INR51.5b), Axis Bank (+INR31.3b), and HDFC (+INR21.4b).

* Stocks exhibited maximum decline in value MoM: Reliance Inds (-INR59.7b), ITC (-INR17.5b), Vedanta (-INR13.7b), HUL (-INR12.5b), and Hero MotoCorp (-INR7.9b).

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