Equity funds added 3.4 lakh folios in February compared with the one-year average of 2.6 lakh. The number has risen for three consecutive months taking the total tally to 6.5 crore, which is nearly 67 per cent of the total mutual fund folio count.
In February, mutual funds continued to trim positions in heavyweights such as Bharti Airtel (Rs 2,800 crore), HDFC Bank (Rs 1,700 crore), Reliance Industries (Rs 1,500 crore) and HDFC (Rs 1,400 crore) as investors continued to redeem money in equity schemes. Positive flows were seen in NTPC (Rs 700 crore), IndusInd Bank (Rs 700 crore) and L&T (Rs 650 crore). Most large MFs remained underweight on banking and overweight on capital goods. Mid-cap additions included SAIL (Rs 540 crore), IRCTC (Rs 430 crore) and Jindal Steel (Rs 290 crore), while major reductions included Dixon Tech (Rs 440 crore), Max Fin (Rs 400 crore) and PI Industries (Rs 390 crore). Small-cap additions were PVR (Rs 380 crore), Railtel (Rs 280 crore) and ESAB (Rs 230 crore) while key reductions were Engineers India (Rs 240 crore), Indian Energy Exchange (Rs 160 crore) and Just Dial (Rs 140 crore).
Read more about Equity MFs under stress, report outflows for eighth month running in Feb on Business Standard. Multi-cap, focused, and large and midcap were the only three categories to see net inflows
Equity mutual funds see outflows for 8th straight month in Feb Equity and equity-linked mutual fund schemes saw a net outflow of over Rs 10,000 crore in February. As per data furnished by the Association of Mutual Funds in India (AMFI) on Tuesday, the net outflow stood at Rs 10,468.02 crore in February. In January, net outflow stood at Rs 9,253.22 crore from Rs 10,147.12 crore in December.
Global stocks recover on retreat in US yields
Global stocks steadied on Tuesday, supported by stronger U.S. equity futures and a decline in U.S. and European bond yields. In Europe, the Euro STOXX 600 was up 0.1% after a gains on Monday that lifted Germany's index to a record high. In volatile trading in Asia, the Shanghai Composite index fell 1.8% and was close to a correction from a multi-year high on Feb. 18 amid fears of policy tightening.
Read more about With new players at the gates, AMCs to see stiff competition in MF space on Business Standard. Currently, nine requests for MF licence are being processed by Sebi
The domestic mutual funds industry has come a long way with current assets under management (AUM) topping Rs 30 trillion. However, global brokerage firm Jefferies believes it still has tremendous growth potential as it has barely scratched the surface when it comes to AUM growth. An analysis done by Jefferies shows India’s MF AUM as a percentage of GDP at 12 per cent is among the lowest and a fraction of global average of 63 per cent. Smaller emerging market peers, such as Brazil (ratio of 68 per cent) and South Africa (48 per cent), boast of better penetration. The brokerage estimates industry AUM to grow at a compound annual growth rate (CAGR) of 13 per cent between FY22 and FY 24. Equity AUM is expected to post a 15 per cent CAGR, with its share in the overall assets mix rising to 46 per cent by FY24, from about 42 per cent currently. India’s equity AUM to GDP is at 5 per cent, compared to global average of 34 per cent.
Read more about Changing investor preference alters pecking order of Equity MF categories on Business Standard. Last year, Sebi modified scheme characteristics of 'multi-cap' schemes, wherein at least 25 per cent of the corpus had to be invested in large, mid, and small-cap stocks each
Despite the upswing in the market, equity-oriented mutual fund (MF) schemes witnessed net outflows for the seventh consecutive month, in January. Net outflows — the difference between purchase and sale of MF units -- for the month stood at Rs 9,253 crore. Since July, investors have pulled out over Rs 42,200 crore from equity schemes, even as the Sensex rallied nearly 50 per cent during this period. While the quantum of outflows in January was lower when compared to the preceding two months, it was still greater than the seven-month average of Rs 6,000 crore, the data from Association of Mutual Funds in India (Amfi) shows.