November was an excellent month of returns for equities as well as mutual funds. As the benchmark Nifty 50 index rose by 11.4% buoyed by Rs.65,300 crore of FII investments, most MF NAVs rose to their 52-week highs. The dampener for the month was Rs.28,320 crore selling by mutual funds across over-valued sectors and stocks. Sector rotation has been in vogue for the better part of this year with excellent performances by Nifty Pharma (35.3%) in April, Nifty Auto (12.2%) in May, Nifty PSU Bank (26.4%) in Jun. Nifty IT returned 22.5% in July and 11.3% in September, while Nifty Media (22.4%) did well in August, followed by Nifty Bank (11.49%) in October. Last month belong to the metals sector with a 24.8% return, with Nifty Bank a close second at 23.9% return. Overall, themes played out well in each month, giving impetus to all mutual funds as well as sector/thematic funds.
In this newsletter, we bring you an overall scenario, with respect to AUM, ongoing schemes, most preferred stocks by mutual fund managers, stocks bought and sold in the month, money flows, new fund offerings, and many other insights. Before going into AMCs and related info, a quick look at the recent circulars issued by Securities Exchange Board of India (SEBI), with respect to mutual funds. Two important circulars were issues by SEBI in November.
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- Enhancement of Overseas Investment limits for Mutual Funds and allocation methodology, where:
- Mutual Funds can make overseas investments subject to a maximum of US$600 million per Mutual Fund, within the overall industry limit of US$7 billion.
- Mutual Funds can make investments in overseas Exchange Traded Fund (ETF(s)) subject to a maximum of US$200 million per Mutual Fund, within the overall industry limit of US$1 billion.
- Introduction of “Flexi Cap Fund” as a new category under equity schemes.
- In order to give more flexibility to mutual funds and taking into account the recommendations of Mutual Fund Advisory Committee (MFAC), a new category named “Flexi Cap Fund” under equity schemes will be available with certain scheme characteristics.
- Enhancement of Overseas Investment limits for Mutual Funds and allocation methodology, where:
Regarding the status of operating AMCs and their respective AUMs, the total assets under management increased from Rs.28.22 lakh crore to Rs.30.00 lakh crore in the month of November.
Of the 42 AMCs, ~ 98% of MF industry total AUM is accounted by 21 AMCs, comprising Rs.16.05 lakh crore of equity assets, Rs.14.49 lakh crore of debt assets, and other assets at Rs.3.07 lakh crore.
As per AMFI data, for the month, net flow into all MF schemes collectively was Rs.27,194.1 crore as compared to the net flow of Rs.98,576 crore in October 2020. A major highlight was the outflow from equity MFs to the tune of Rs.12,917 crore, marking it the 5th consecutive month of net outflows. Investors continued their exodus from hybrid schemes with a net outflow of Rs.5,246.2 crore, making it a total outflow of Rs.47,264.1 crore for the calendar year (CY) 2020.
Let us examine each of the subcategories relating to the main categories. Overnight and Liquid funds which had an inflow of ~ Rs.25,000 crore in September, saw an outflow of ~ Rs.24,000 crore now.
Low duration and short duration funds along with corporate bond funds had the best inflows at Rs.51,000 crore collectively. Among equity-oriented schemes, all schemes saw considerable outflows. With the recent dramatic upswing in equity markets, investors chose to book profits and shore up the gains of the last six months.
Hybrid funds continue to be the worst affected, recording the 5th consecutive month of outflows, similar to equity funds. A total of Rs.23,270 crore was withdrawn from these schemes during the same period. It would be safe to assume that the risk propensity of investors remains quite high, as market participants continue to opt for direct equities.
Flows into solution-oriented schemes continue to be negligible while inflows into other ETFs were positive at Rs.641 crore, even as index funds and gold ETFs reversed their flows in this month.
November marks only the second month of outflows for Gold ETFS in CY2020, as gold prices corrected due to hopes of commercial availability of vaccines against corona virus infection, improved economic activity, though inflation remains high across developed as well as emerging economies.
Among closed ended schemes, maturity of many FMPs resulted in an outflow of Rs.234.6 crore, while Equity Linked Savings Schemes (ELSS) saw minor outflows. Overall, November wasn’t a great month for mutual fund inflows, while investments in direct equity ended up with good gains.
For CY2020, income/debt-oriented schemes resulted in net inflows of Rs.1.87 lakh crore followed by ETFs at Rs.58,665 crore and equity-oriented schemes at Rs.19,250 crore. Rest of the MFs witnessed either poor inflows or exacerbated outflows due to month on month rising stock markets.
SIP contribution dropped from Rs.7800 crore to Rs.7,300 crore on a month on month basis. On a year on year basis, the fall was much steeper at ~Rs.1000 crore. Average monthly inflows for the CY remain at Rs.8,055 crore. SIP contribution for the financial year stands at Rs.62,929 crore.
Gross new SIP folio additions stood at 10.63 lakh with net addition at 3.39 lakh. Total number of outstanding SIP accounts stand at 3.40 crore and SIP AUM at Rs.3.78 lakh crore.
In terms of details related to mutual fund schemes, given below are top 30 stocks held by all schemes across all AMCs, along with number of shares, holding value at market rate as of 30 November, followed by number of schemes holding it as a percentage of their AUM. The erst while performing stocks like Reliance, HDFC Bank, Maruti Suzuki and many other stocks succumbed to profit booking on the back of strong rise in stock prices.
Mutual fund managers continue to churn their portfolios, moving from growth stocks with over stretched valuations to value stocks. Out of the 50 Nifty index stocks, 40 stocks witnessed selling, including companies like Bajaj Finserv (11,11,285 shares) which gave 50+ returns in November. HCL Technologies saw an addition of 80,35,361 shares, followed by Adani Ports & SEZ with 52,35,469 shares. Among the 60 stocks from BSE PSU Index, 33 stocks were sold and 27 stocks were bought during the month.
A look at the top 30 stocks where MFs increased their exposure in November.
Top 30 stocks where fund managers reduced their exposure during the month are:
Based on changes in fundamentals or news flow of a company, fund managers buy and sell large volume of stocks. After an extensive research, top 30 stocks which were bought or sold in large volumes were collated and are being presented for the benefit of investors. Gland Pharma was the newest IPO and with pharma sector still in vogue, fund manager subscribed to it. PSU stocks like Bank of Baroda, REC, Bharat Electronics were bought in large quantities, to strengthen the portfolios towards value investing.
Similar to the above compilation, large volume of stocks which were sold by all mutual funds collectively in November are:
Owing to rising markets and change of regulations, New fund offerings (NFOs) are being introduced across asset classes by various AMC’s. November saw a total of 10 NFOs, while the NFOs which are open for subscription in December stand as follows:
These insights from the data and analysis would surely help investors in better understanding of mutual fund industry and play a pivotal part in direct equity investing too. FYERS Direct team continues its research to bring every investor, the best of information and insights, and help converting them into actionable items supporting their investments. All through the month, FYERS research team will share information that clients can benefit from, at our twitter handle and by the 15th of every month, the newsletter will be made available on our website.
A excel workbook is made available to readers each month, highlighting all the schemes across equity, debt, hybrid, index and ETFs, their NAVs, minimum investment amounts, AUMs, expense ratios, exit loads, risk ratios as well as returns – absolute, annualized and calendar returns.
Mutual Funds Summary & Performance
Hope investors make the best use of the data, analysis and insights at hand, to further their journey of investment building with FYERS Direct Mutual Funds.
Stay Safe and Happy Investing!