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MOSL: FUND FOLIO (May 2018)-Indian Mutual Fund Tracker — Good start to FY19-AUM at new highs-Defensives’ weight rises to 14-month high

FUND FOLIO (May 2018): Indian Mutual Fund Tracker — Good start to FY19; AUM at new highs; Defensives’ weight rises to 14-month high

 

Key observations

• Domestic mutual funds (MF) started the financial year on a positive note, with total AUM touching a new high of INR23.3t (+8.9% MoM) in April.
• The MoM rise was primarily due to rise in AUM of liquid, equity and balanced funds. All categories saw a rise, except Gilt and Gold ETF funds.
• After declining for two consecutive months in February and March, equity AUM rose 6.7% MoM to INR8t in April to scale new highs.
• The increase in equity AUM was led by a rise in market indices (Nifty-50: +6.2% MoM). While equity scheme sales were down 38% MoM to INR269b, redemptions fell 61% MoM to INR145b. Consequently, net inflows increased from INR67b in March to INR124b in April.
• Equity AUM, as a percentage of India’s market capitalization, increased 69bp YoY to 5.2% in April. Notably, equity AUM increased 41% over the last 12 months, as against a 22% rise in India’s market capitalization.

 

Some interesting facts

• The month saw a notable change in sector and stock allocation of funds. On an MoM basis, the weights of Autos, Consumer, Technology, Metals, Healthcare and NBFCs increased, while those of PSU Banks, Oil & Gas, Private Banks, Capital Goods and Chemicals moderated.
• Defensives’ weight rose to a 14-month high of 26.3% (+40bp MoM), as the weight of Consumer, Technology and Healthcare rose 20bp, 10bp and 10bp MoM, respectively. Domestic and Global Cyclicals’ weights fell 30bp and 10bp MoM to 63.9% and 9.8%, respectively.
• Of the top 10 stocks in terms of value increase MoM, four were from Financials.
• Infosys saw a value increase of INR30.8b in April, as the stock was up 5.7%. Notably, the stock saw net buying by 14 of the top 20 funds. ITC was also one of the preferred stocks among MFs in April, with net buying by 11 funds – while its value increased by INR24.5b, the stock was up 10% in the month.
• SBI, one of the least preferred stocks among MFs in April, saw net selling by 9 funds. Value decreased by INR1.8b, and the stock was down 1.5% in the month.