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MOSL: FUND FOLIO (August 2018)-Indian Mutual Fund Tracker — Momentum revives-NBFCs climb to second position in MFs’ allocation

FUND FOLIO (August 2018): Indian Mutual Fund Tracker — Momentum revives; NBFCs climb to second position in MFs’ allocation

 

Key observations

• Domestic mutual funds (MFs) regained positive momentum in July 2018 after declining for two consecutive months – the equity AUM of the mutual fund industry rose 5.4% MoM to INR8.3t in July to a new high.
• The increase in equity AUM was led by a rise in market indices (Nifty up 6% MoM). While equity scheme sales were up 8% MoM to INR259b, redemptions fell 2% MoM to INR153b. Consequently, net inflows increased from INR82b in June to INR106b in July.
• Total AUM of the MF industry rose 0.8% MoM in July to INR23.1t. The rise during the month of July was primarily led by a rise in AUM of equity funds (INR425b), balanced funds (INR59b) and other ETFs (INR16b).
• Net inflows for the MF industry stand at INR1.7t for CY18YTD, 48% contributed by equity funds. All categories of funds – except income, GILT, gold ETFs and FOF – witnessed positive inflows.
• Equity AUM as a percentage of India’s market capitalization is at an all-time high of 5.4% (+70bp YoY).

 Some interesting facts

• The month saw a notable change in sector and stock allocation of funds. On an MoM basis, the weights of PSU Banks, Oil & Gas, NBFCs and Consumer increased, while those of Metals, Utilities, Autos, Technology, Media, Healthcare and Capital Goods moderated.
• NBFC sector’s weight reached a new high of 9.6% (+20bp MoM and +170bp YoY). As a result, the sector overtook Autos to take the second position in sector allocation of mutual funds – it was at the fourth position 12 months ago.
• Consumer weight increased for six successive months to climb to the 5th position in sector allocation to 7.7% (+140bp YoY). After increasing for six consecutive months, the weight of Technology moderated in July to 8.3% (-10bp MoM).