Here’s how mutual funds managed your money in October

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With benchmark indices hitting lifetime highs in the month of October investors turned cautious as inflows into the equity mutual funds hit a six-month low. As per data released by the Association of Mutual Funds in India (AMFI), net inflow in open-ended equity schemes plummeted by 39.90% to Rs 5,214.87 crore in October 2021 compared to Rs 8,677.41 in September 2021.

The MF industry’s total AUM increased by 1.6% MoM (Month on Month) to Rs 37.3 lakh crore in October 2021, primarily led by an MoM increase in AUM of equity funds (Rs 20,500 crore), income funds (Rs 20,000 crore), and balanced funds (Rs 14,400 crore).

“Equity AUM (including ELSS and index funds) of domestic MFs rose by 1.5% MoM to Rs 13.5 lakh crore in October 21, led by a rise in market indices (Nifty up 0.3% MoM) and decrease in redemptions (down 21.7% MoM to Rs 24,500 crore). Equity scheme sales decreased by 19% MoM to Rs 33,100 crore. This led to a moderation in net inflows to Rs 8,600 crore in Oct’21 (v/s Rs 9,600 crore in Sep’21), marking the eighth consecutive month of inflows,” said Deven Mistry, Research Analyst at Motilal Oswal.

Sector swap

The month saw notable changes in the sector and stock allocation of funds. On a MoM basis, the weightage of Banks (Private and PSU), Automobiles, Capital Goods, Cement, and Retail increased, while that for Healthcare, Consumer, Utilities, Oil and Gas, Technology, Chemicals, Infrastructure, and Consumer Durables moderated.

This sectoral rotation saw Private Banks’ weightage rising to a five-month high of 17.7% (+90 basis points MoM; +10 basis points YoY). The sector was at a 29-month low in Sep’20. Even the PSU Banks’ weightage at a 20-month high of 3.5% (+30 basis points MoM; +150 basis points YoY). On the contrary Healthcare’s weightage moderates for the third consecutive month, at a 20-month low of 6.9% (-30 basis points MoM and -150 basis points YoY), according to data sourced from the AMFI and mutual fund database NAV India and analysed by Motilal Oswal Financial Services.

Stock play

Mutual funds were net buyers in 54% or 27 Nifty stocks and reduced holding in 46% or 23 stocks in October 2021. HCL Technologies, Wipro, UPL, Eicher Motors, and Titan were among the top 5 Nifty stocks that saw net buying by mutual funds. On the other hand, IOC, Maruti Suzuki, BPCL, Tata Consumer, and Coal India are the top-5 Nifty stocks in which the mutual fund industry reduced stake.

“In Oct’21, four out of the top 10 stocks that saw the maximum increase in value were from the BFSI space. ICICI Bank, SBI, Tata Motors, Larsen & Toubro, ICICI Lombard General Insurance, Avenue Supermarts, M&M, Titan, Infosys, and HDFC increased the most in terms of value MoM,” a Motilal Oswal report noted.

Stocks that saw the maximum decline in value MoM were TCS, IRCTC, NTPC, Coal India, HUL, ITC, Cipla, Tata Power, SRF, and BPCL

Top schemes

According to an analysis by Motilal Oswal Financial Services of the Top 25 schemes by AUM, the following reported the highest increase SBI Focused Equity Fund (+3.7% MoM change in NAV), ICICI Prudential Bluechip Fund (+1.7% MoM), Axis Midcap Fund (+1.6% MoM), HDFC Flexi Cap Fund (+1.5% MoM), and SBI Flexi Cap Fund (+1.4% MoM).