Mutual Fund Tracker: September 2020

Monthly net outflow in Equity MFs continues for the 3rd consecutive month; albeit at lower pace

Equity MF saw a net outflow in the month of September (Rs.734 cr), for the third consecutive month, as investors preferred to continue booking profit in view of declining household cash-flows in prevailing uncertain economic environment. The sharp V-shaped recovery during last few months and change in the definition of multi-cap funds by SEBI are likely reason for outflow from the equity mutual funds.

Most of the equity mutual fund categories witnessed redemption during the month of September 2020, except three categories – Focused, Large & Mid Cap and Small Cap. However, we can derive some solace from the quantum of decline which was lower as against the outflow trends seen during previous 5 months. 

Monthly Net Inflow (+ve) / Outflow (-ve) (Rs. Crores)

Multi Cap category saw an outflow of Rs.1,144 cr as against Rs.459 cr of average inflows during previous 12 months. Similarly, Large Cap saw an outflow of Rs.576 cr as against Rs.740 cr of average inflows during the last 12 months. 

Debt mutual fund schemes also saw redemption that too with increased numbers compared to the previous month. As a result, total AUM fell to Rs.26.7 lakh crores at the end of September 2020 vs. Rs.27.5 lakh crores at the end of the previous month.

Sectoral Overweight/Underweight positioning of top MF

MFs increased its exposure to IT Services – 11.3% in September, an increase of 150 bps during last one month and also highest levels since March 2020. Other segment which saw buying  was Pharma & Healthcare – 70 bps increase during September and Oil & Gas – 50 bps increase in the month of September. 

Highest selling was seen in Financials sector where decline was 190 bps during September 2020. Telecom & Media sector also saw decline in weights – 3.3% in September 2020 from 3.6% in August 2020, a decline of 30 bps. Other sectors which saw decline in the weights are Utilities and Industrials.

Top MF activity:

Top Buys:

Large Cap: Bharti Airtel, ITC, Wipro

Mid Cap: Essel Propack, Bharat Electronics, Ashok Leyland 

Small Cap: First Source Solutions, NALCO, India Cements

Top Sells:

Large Cap: SBI, PNB, ICICI Bank

Mid Cap: Vodafone Idea, BHEL, Hexaware Technologies

Small Cap: CG Power, IDFC, Mahindra CIE Automotive.

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 210 bps from 5.1% in May 2020 to 3.0% in September 2020, despite 30 bps improvement from the previous month (August 2020: 2.7%) largely on back of reduction in cash levels in Multi Cap, Large Cap, Small Cap, Focused 

Cash holdings growth MoM was higher for categories like Mid Cap and and Focused funds while it was moderate for the categories like Large & Mid Cap, Thematic and ELSS. On the other hand it continued to decline even MoM for sub-categories like Multi Cap, Small Cap and Dividend yield funds.

Exhibit 1: Scheme wise cash holding (September 2020)

Exhibit 2: MF wise top buys/sells in September 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.

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