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FUND FOLIO (May 2021): AUM scales new highs to surpass INR32t+; equities see inflows for second consecutive month

Key observations

* The Nifty ended its two-month winning streak in Apr’21, as the market witnessed elevated volatility due to the second COVID wave. The index oscillated ~900 points before closing 60 points, or 0.4%, lower MoM at 14,631. FII outflows of USD1.5b were seen after six consecutive months of inflows. DIIs posted inflows (of USD1.5b) for the second consecutive month. Mid-caps/Small-caps outperformed large-caps by 2.5%/6% in Apr’21.

* Another month, another trillion AUM – The MF industry’s AUM scaled new heights to reach INR32.4t in Apr’21 (+3%; INR1t MoM), primarily led by liquid, equity, arbitrage, and income funds. Notably, AUM was up MoM across categories, except infrastructure debt funds.

* Equity AUM in domestic MFs (including ELSS and index funds) increased a marginal 1.2% MoM to INR10.3t in Apr’21 despite bleak market sentiment. Redemptions declined a marginal 1.4% MoM to INR211b; however, an even higher fall in equity scheme sales (-22.2% MoM to INR240b) led to decline in net inflows to INR30b in Apr’21 (from INR95b in Mar’21), marking the second consecutive month of inflows.

Some interesting facts

* The month saw notable changes in the sector and stock allocation of funds. On a MoM basis, weights of Healthcare, Metals, Chemicals, and Textiles increased, while weights of Consumer, Technology, Cement, Autos, Consumer Durables, Capital Goods, Banks (Private and PSU), Retail, Utilities, and Real Estate moderated.

* Healthcare weight increased for the second consecutive month to 7.8% (+60bp MoM). The sector now ranks third in the allocation of mutual funds – it was in fifth position a year ago.

* Metals’ weight increased for the third consecutive month to a 29-month high of 3.2% (+60bp MoM; +130bp YoY).

* Consumer weight reached 38-month lows of 6.8% (-40bp MoM; -170 YoY). As a result, the sector, which was in third position a year back, slipped to the sixth position in the allocation of mutual funds.

* In terms of value increase MoM, three each stocks in the top 10 were from Healthcare and Private Financials: ICICI Bank (+INR30.2b), Axis Bank (+INR24.8b), Sun Pharma (+INR17.7b), Bajaj Finance (+INR16.8b), Divi’s Labs (+INR15b), and Dr Reddy’s Labs (+INR10.2b).

* Stocks that exhibited a maximum decline in value MoM: HDFC Bank (-INR41.2b), ITC (-INR24.9b), Infosys (- INR19.9b), TCS (-INR14b), and L&T (-INR11.5b)..

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