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MOSL: FUND FOLIO (January 2020): Equity AUM up for sixth successive year, net inflows consolidate in CY19

FUND FOLIO (January 2020): Equity AUM up for sixth successive year

Key observations
** Indian markets bid adieu to 2019 with solid gains, led by 15 frontline Nifty stocks; however, broader markets have underperformed. Following the corporate tax rate cuts in Sep’19, the Nifty staged a smart rally and ended CY19 with an impressive 12% return.

** Domestic MFs witnessed steady flows during the year, propelling an uptrend in the AUM of equity funds for the sixth consecutive year.

** Equity AUM of domestic MFs touched a new high of INR9t (+6% YoY) in CY19, led by a rise in market indices (Nifty +12% YoY). Redemptions decreased 12% YoY to INR2,024b. However, a decrease in sales of equity schemes (-14% YoY to INR3,079b) led to a decline in net inflows to INR1,054b in CY19 from INR1,288b in CY18 .

** The mutual fund industry’s average AUM increased 13.6% YoY (INR3.2t) to INR26.9t in CY19, primarily led by inflows in equities, other ETFs, income and liquid categories.

Some interesting facts
** The year saw a notable change in sector and stock allocation of funds. Domestic Cyclicals’ weight increased marginally by 30bp to 62%, as increase in the weights of Private Banks, NBFCs, Cement, Real Estate and Retail was offset by a decline in the weights of Automobiles, Capital Goods, Chemicals, PSU Bank, Media and Infrastructure (refer page 3 for detailed charts).

** Defensives’ weight decreased from 27.6% in CY18 to 27.4% in CY19. Global Cyclicals’ weight, too, decreased 10bp to 10.6%.

** In terms of value increase MoM, 5 of the top-10 stocks were from Financials. ICICI Bank (+INR29b), Kotak Mahindra Bank (+INR13.2b), HDFC (+INR12.9b), Axis Bank (+INR11.6b) and Bajaj Finance (+INR11.2b).

** Maruti Suzuki’s value increased by INR12b, with the stock gaining 1.6% MoM. Notably, the stock witnessed net buying by 17 of the top 20 funds.

** Stocks exhibiting maximum decline in value MoM were Reliance Industries (-INR16.5b), ITC (-INR10.5b), SBI (-INR9.2b), BPCL (-INR6.1b) and SBI Life Insurance (-INR6b).