FREE

MOSL: FUND FOLIO (January 2019)-Indian Mutual Fund Tracker — Steady inflows in the year gone by, Defensives gain attention

FUND FOLIO (January 2019): Indian Mutual Fund Tracker — Steady inflows in the year gone by, Defensives gain attention

 

Key observations

• CY18 was a year of modest returns and elevated volatility for the Indian markets, which was particularly noticeable in the last quarter. Sentiment was bleak with the markets stormed by adverse news flashes throughout the year.
• The picture in the domestic mutual funds (MFs) industry, however, was much brighter, characterized by steady flows, and equity AUM upmove for the fifth consecutive year.
• Domestic MFs’ equity AUM increased 9.5% YoY to INR8.4t in CY18, led by an upmove in market indices (Nifty up 3.2%) and equity scheme sales (+4% YoY to INR3,578b). However, redemptions increased 20% YoY to INR2,290b, restricting net inflows to INR1,288b in CY18 (v/s INR1,523b in CY17).
• After increasing for 20 consecutive quarters, the mutual fund industry’s average AUM declined 2.9% QoQ to INR23.7t in 4QCY18. However, AUM was up 5.5% for CY18, primarily led by inflows in the liquid, equities, other ETF and balanced categories.
• Equity mutual funds attracted steady flows, largely due to the participation through systematic investment plans (SIPs). Total amount garnered through SIPs stood at INR80.2b in Dec’18 (+29% YoY and up 2x in two years).

Some interesting facts

• The year saw a notable change in sector and stock allocation of funds. Defensives’ weight increased from 24.3% in CY17 to 27.6% in CY18. Global Cyclicals’ weight, too, increased 50bp to 10.7%.
• Domestic Cyclicals’ weight declined by 380bp to 61.7%, as the increase in the weights of Private Banks, NBFCs and Retail was more than offset by a fall in the weights of Automobiles, Capital Goods, Infrastructure and Cement (see detailed charts below).
• Of the top 10 stocks in terms of value increase MoM, six were from Financials.