IGI Logo

FUND FOLIO (January 2022): Equity AUM up 46% YoY in CY21; highest net inflows recorded in three years

Key observations

* In CY21, the Nifty recorded impressive gains of 24% YoY despite adverse COVID-related challenges. CY21 was a year of heightened activity on multiple fronts. The index rallied strongly (up 26% YoY) until 3QCY21, driven by decline in COVID cases, a significant pickup in the pace of vaccination, and the consequent sharp revival in economic activity. However, the detection of Omicron (a new variant) in South Africa and its gradual spread to several other nations, coupled with the possibility of interest rate hikes ahead, led to 1.5% QoQ decline in the Nifty in 4QCY21. FII inflows decelerated to USD3.8b. However, DIIs bounced back with USD12.1b in inflows, after recording outflows in CY20.

* Defying the looming challenges, investors continue to invest in MFs, with inflows and contributions in systematic investment plans (SIPs) reaching fresh highs of INR113.1b in Dec’21 (up 2.7% MoM and 34.3% YoY).

* Equity AUM for domestic MFs (including ELSS and index funds) reached new highs of INR13.9t (+46% YoY) in CY21, led by a) a rise in market indices (Nifty: +24% YoY) and b) an increase in equity scheme sales (up 70% YoY to INR3,964b). At the same time, redemptions increased 29% YoY to INR2,916b. Consequently, net inflows came in at three-year highs of INR1,048b in CY21, up from INR64b in CY20 and INR768b in CY19.

* The MF industry’s total AUM increased 22% YoY (INR6.7t) to INR37.7t in CY21, led by an increase in equity funds (INR4,376b), other ETFs (INR1,280b), and balanced funds (INR1,143b).

Some interesting facts

* The year saw a notable change in the sector and stock allocation of funds. The weight of domestic cyclicals increased 160bps to 58.8%, led by an increase in the weights of Capital Goods, PSU Banks, Retail, Automobiles, Infrastructure, and Cement.

* The weight of Defensives decreased 80bp to 32.5%, weighed by Consumer, Healthcare, Utilities, and Telecom. Global cyclicals’ weight reached five-year lows (down 80bp YoY to 8.7%).

* Technology saw a massive increase in weight to 13.5% (+230bp YoY) in CY21. The sector ranks second and is at an all-time high in respect of sectoral allocation by MFs.

* Consumer slipped to the sixth place from the fourth place a year ago, with a 140bp decrease in weight to 6.4%.

* PSU Banks improved its position to 9 from 13 a year ago, with the weight increasing 60bp to 3.1%.

* With regard to value increase MoM, 5 of the Top 10 stocks were from Technology: Infosys (+INR109.2b), TCS (+INR40.5b), HCL Tech(+INR38.5b), Wipro (+INR24.9b), and Tech Mahindra (+INR22.3b)..

To Read Complete Report & Disclaimer Click Here

For More Motilal Oswal Securities Ltd Disclaimer http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html SEBI Registration number is INH000000412

Above views are of the author and not of the website kindly read disclaimer