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According to data released by the Association of Mutual Funds in India (AMFI), investors continued to pump money into mutual funds for the third straight month. Open-ended equity mutual funds saw a net inflow of Rs 10,082.98 crore in May 2021 as against Rs 3,437.37 crore in April. The inflows are at a 14-month high and are almost back to pre-covid levels. Net inflows in open-ended equity mutual funds schemes for the month of March 2020 stood at Rs 11,722.74 crore.
The mutual fund industry saw an overall AUM increase of 2.1% MoM (Month over Month) to touch new highs of Rs 33.1 lakh crore in May 2021, primarily led by an increase in AUM of equity funds, other ETF funds, and balanced funds.
“Equity AUM (incl. ELSS and index funds) of domestic MFs increased 7.7% MoM to Rs 11.1 lakh crore in May 2021. This was on account of a rise in market indices (Nifty up 6.5% MoM) and an increase in equity scheme sales (up 15% MoM to Rs 27,700 crore). Furthermore, redemptions decreased 18.6% MoM to Rs 17,200 crore. This led to an increase in net inflows to Rs 10,500 crore in May 2021 – the highest in past 14 months,” noted a report by Motilal Oswal.
Sector Swap
While investors are opening their piggy bank to invest in mutual funds, lets understand where these funds are investing.
The month of May 2021 saw notable changes in the sector and stock allocation of funds. On an MoM basis, the weights of public sector banks, Oil & Gas, Automobiles, Capital Goods, Insurance, and private banks increased, while the weights of Healthcare, Metals, Consumer, Technology, Telecom, Chemicals, Consumer Durables, and Cement moderated, said Deven Mistry, Research Analyst at Motilal Oswal
This sectoral rotation public sector banks’ weight reached 15-month highs of 3.4% (+30 basis points MoM; +120 YoY). As a result, the sector – which was in the thirteenth position a year ago – climbed to the ninth position in the allocation of mutual funds, according to data sourced from the AMFI and mutual fund database NAV India, and analysed by Motilal Oswal Financial Services.
That apart, oil and gas sector weight increased for the second consecutive month to 7.1% (+10bp MoM). While Metals sector weight – after reaching a 29-month high in April 2021 moderated to 3% (-20bp MoM; +100bp YoY) in May 2021.
Stock play
Mutual funds were buyers in 46% or 23 Nifty stocks and reduced holding in 52% or 26 stocks in May 2021.
SBI Life Insurance, Hero MotoCorp, JSW Steel, ONGC and HDFC were among top 5 Nifty stocks that saw net buying by mutual funds. On the other hand, Britannia Industries, Tata Steel, Wipro, Grasim and M&M are top 5 Nifty stocks in which the mutual fund industry reduced their stake.
“In May 2021, 6 of the top 10 stocks that saw the maximum increase in value were from the BFSI space. SBI, HDFC Bank, ICICI Bank, Reliance Industries, HDFC, L&T, SBI Life Insurance, Infosys, Axis Bank, and Maruti Suzuki increased the most in terms of value MoM,” noted Fund Folio report of Motilal Oswal.
Stocks that saw the maximum decline in value were JSPL, Cholamandalam Investment & Finance, Deepak Nitrite, Tata Chemicals, Britannia Industries, Tata Steel, Info Edge, Linde India, Navin Fluorine, and Tata Consumer.
Top schemes
According to an analysis by Motilal Oswal Financial Services of Top 25 schemes by asset under management HDFC Small Cap Fund (+10.7% MoM change in NAV), HDFC Flexi Cap Fund (+10% MoM), Nippon India Small Cap Fund (+8.4% MoM), HDFC Top 100 Fund (+8.4% MoM), and ICICI Pru Value Discovery Fund (+7.1% MoM) were some of the top-performing schemes that outperformed benchmark index Nifty 50 which delivered 6.50% returns in May 2021.