Mutual Fund Tracker: November 2020
Net flows at all-time low; Aggressive buying in Financials continue
Equity MF saw a net outflow in the month of November (Rs. 12,917 cr), for the fifth consecutive month, as investors preferred to continue booking profit. This was the highest ever monthly outflow from equity MFs as the benchmark indices reach all-time highs. Post US elections, the market saw a huge upwards movement which made the investor book profit, causing such a big outflow.
All of the equity mutual fund categories witnessed redemption during the month of November 2020,
Monthly Net Inflow (+ve) / Outflow (-ve) (Rs. Crores)
Multi Cap category saw an outflow of Rs.2,842 cr as against Rs.191 cr of average inflows during previous 12 months. Similarly, Large Cap saw an outflow of Rs.551 cr as against Rs. 595 cr of average inflows during the last 12 months.
Debt mutual fund schemes also saw significant inflows to Rs. 1.1 lakh crores compared to an outflow of Rs. 0.52 lakh crores in the previous month. As a result, total AUM rose to Rs.28.2 lakh crores at the end of October 2020 vs. Rs.26.9 lakh crores at the end of the previous month.
Sectoral Overweight/Underweight positioning of top MF
Financial sector saw higher buying (weight at 31.1%, up 246bps mom, however still 400bps lower than NSE 200 banking weight). Followed by Industrials (at 4.7%, up 25bps mom), Metals & Mining (at 2.7%, up 22bps mom) and Auto & Anc. (at 6.5%, up 16bps mom).
MFs reduced holdings: Oil & Gas (at 7.4%, -99bps mom), IT (at 10.6%, -83bps) and Staples (at 6.1%, -35bps). Others were Healthcare, Agri & Chem, Tele & Media, Utilities, Building Material, Transport, Discretionary, losing 34/24/14/13/10/5/1 bps mom respectively.
IT and Financial sectors remain the most bought sectors on 5 month basis.
Top MF activity:
Top Buys:
Large Cap: HCL, Adani Ports, SBI
Mid Cap: Federal Bank, Vodafone Idea, Crompton Greaves
Small Cap: Vedanta Ltd., Inox Leisure, DCB Bank
Top Buys:
Large Cap: NTPC, ICICI Bank, Power Grid
Mid Cap: Bharat Heavy, Ashok Leyland, JSW Energy
Small Cap: CG Power, National Aluminium, Yes Bank
Cash holding of Equity MFs is down since May 2020 despite some uptick from previous month:
Overall cash holding of equity oriented MF schemes is down significantly by 180 bps from 4.5% in June 2020 to 2.7% in November 2020. The cash levels remained constant MoM as the Large Cap and Focused funds compensated for the lower cash levels in Mid Cap and Small Cap funds.
Cash holdings growth MoM was higher for categories like ELSS and Multicap. On the other hand, it continued to decline even MoM for sub-categories like Sectoral/ Thematic Fund, Value Fund, and Dividend Yield Fund.
Exhibit 1: Scheme wise cash holding (November 2020)
Exhibit 2: MF wise top buys/sells in November 2020
Disclaimer: The views expressed here are based solely on information available publicly/internal data/other reliable sources believed to be true. Facts presented have been verified, however, the same may contain human errors/ errors from database. The information is provided merely as a complementary service and do not constitute an offer, solicitation for the purchase or sale of any financial instruments, inducement, promise, guarantee, warranty, or as an official confirmation of any transactions or contract of any kind.
Mutual Fund Tracker: October 2020
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About The Author
Saday Sinha
Mr. Saday Sinha is Founder & CEO of DreamLadder Capital, a boutique wealth advisory firm. He is a seasoned investment professional with over 15 years of experience in the Indian Equity market. He has spent a decade tracking the banking and NBFC sector as part of the Equity Research team at Kotak Securities. He also worked with IDFC as an Analyst with the India Equity Strategy team. He holds a Master's degree in Economics from Delhi School of Economics and is an alumnus of Jamnalal Bajaj Institute of Management Studies, (Mumbai), with specialization in Finance. He writes for various magazines & Newspapers and his valuable opinion has also been sought by news channels like CNBC, ET Now or Bloomberg, in the past. He also speaks at seminars & conferences and lectures at Management institutes.