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MOSL: FUND FOLIO (April 2019)-Indian Mutual Fund Tracker — Equity AUM up for sixth successive year-net inflows consolidate in FY19

FUND FOLIO (April 2019): Indian Mutual Fund Tracker — Equity AUM up for sixth successive year; net inflows consolidate in FY19

 

Key observations

• Markets were seen reacting to news coming from across geographies in FY19, leading to bouts of volatility throughout the year, particularly over the last three months.
• Nevertheless, domestic mutual funds (MFs) industry showed relative calm, with steady flows and equity AUM trending up for the sixth consecutive year.
• Domestic MFs’ equity AUM touched a new high of INR8.9t (+19% YoY) in FY19, led by a rise in market indices (Nifty +15% YoY). Redemptions declined 15% YoY to INR1,958b, but an even higher fall in equity schemes sales (-24% YoY to INR3,038b) led to a decline in net inflows from INR1,711b in FY18 to INR1,080b in FY19.
• The mutual fund industry’s average AUM increased 6% YoY (or INR1.4t) in FY19, primarily led by inflows in equities, liquid and other ETFs categories. This was first single-digit growth in average AUM after six years of double-digit growth.
• MF AUM grew 3.6% QoQ in 4QFY19 – after declining by 2.8% QoQ in the previous quarter – to hit an all-time high of INR24.5t. 

Some interesting facts

• The year saw a notable change in sector and stock allocation of funds. Defensives’ weight increased from 25.9% in FY18 to 27.5% in FY19. Global Cyclicals’ weight, too, increased 100bp to 10.9%.
• Domestic Cyclicals’ weight declined by 260bp to 61.6% in FY19, as the increase in the weights of Private Banks, PSU Banks and Retail was more than offset by a fall in the weights of Automobiles, Capital Goods, Infrastructure and Cement
• In Mar’19, of the top 10 stocks in terms of value increase MoM, four were from Banks.
• HDFC Bank saw a value increase of INR67.6b in Mar’19, as the stock was up 11.3%. Notably, the stock saw net buying by 10 of the top-20 funds.
• Value shocks were significant in Automobile stocks. Eicher Motors was one of the least preferred stocks among MFs, with net selling by 9 funds. Value decreased by INR5b, despite the stock gaining 3.2% in the month.