Mar-21 quarterly MF flows dominated by passive funds

As of the close of the Mar-20 quarter, the AUM of the Indian mutual fund's segment stood at Rs24 trillion.

May 04, 2021 10:05 IST India Infoline News Service

The latest quarterly flow data for the Mar-21 quarter published by AMFI shows visible signs of selling by investors in equity funds and debt funds. The quarter has been tricky for fund flows. The signals of corporate strain were visible in the Mar-21 quarter as there was heavy selling in debt funds. Equity funds saw positive flows in March after a break of almost 8 months but that was still not enough to prevent a quarterly net redemption figure.

As of the end of the Mar-21 quarter, the net AUM of the Indian mutual fund segment stood at Rs31.43 trillion, just 1% higher compared to the Dec-20 quarter. The average net AUM stood at Rs32.17 trillion. Here is how the break-up of MF AUM looks at the end of the Mar-21 quarter.
Data Source: AMFI

As of the close of the Mar-20 quarter, the AUM of the Indian mutual fund's segment stood at Rs24 trillion. From that point, the AUM has grown nearly 31%. However, this AUM accretion has been largely driven by equity price appreciation as Nifty and Sensex gained over 65% during this period.  Let us look at how the flows into specific categories of mutual funds panned out in the Mar-21 quarter.

How debt fund flows panned out in the Mar-21 quarter?

Flows into Debt Funds in the Mar-21 quarter (AMFI)
Funds Mobilized Redemptions Net Flow # Net AUM as of Mar-21
Rs19.19 trillion Rs20.03 trillion (Rs0.84) trillion Rs13.28 trillion

# - figures in brackets indicate negative flows (net outflows)

The year-end pressures and COVID uncertainty led to net redemptions in debt funds to the tune of Rs84,202cr in the Mar-21 quarter, compared to net inflows of Rs169,313cr in the Dec-20 quarter. What were the big flow drivers in the Mar-21 quarter? Let us look at inflows first. Overnight funds saw inflows of Rs5,176cr, Floater Funds Rs5,814cr and medium duration funds Rs2,248cr. These were the major inflow contributors with most of the other categories of debt funds seeing outflows in the Mar-21 quarter.

There were more negative contributors in the Mar-21 quarter. Liquid funds saw outflows of (Rs47,398cr), low duration funds (Rs21,044cr), short duration funds (Rs12,419cr) and Banking & PSU funds (Rs6,427cr) in the Mar-21 quarter. There was a rush for liquidity among corporates and also concerns over the new SEBI AT-1 bond rules which led to sell-off in Banking & PSU funds. The total AUM of all debt funds at the end of the Mar-21 quarter stood at Rs13.28 trillion with its overall share of MF AUM falling from 45.32% in Dec-20 quarter to 42.26% in the Mar-21 quarter.

How equity fund flows panned out in Mar-21 quarter?

Flows into Equity Funds in the Mar-21 quarter (AMFI)
Funds Mobilized Redemptions Net Flow Net AUM as of Mar-21
Rs73,054cr Rs77,727cr (Rs4,673cr) Rs9.79 trillion


# - figures in brackets indicate negative flows (net outflows)

Equity funds in the Mar-21 quarter saw net outflows of (Rs4,673cr). What were the big contributors to this outflow in the Mar-21 quarter? There was redemption pressure across most classes of equity funds. The biggest outflows were seen in large-Cap funds (Rs3,410cr), Value funds (Rs3,217cr), Multi/Flexi-Cap Funds (Rs2,301cr) and small-cap Funds (Rs1,688cr).
Interestingly, there were a couple of positive contributors too. Sectoral funds saw positive flows of Rs4,230cr for the second quarter in succession. Additionally, mid-cap funds and focused funds also saw net inflows. The total AUM of all equity funds at the end of the Mar-21 quarter stood at Rs9.79 trillion increasing its share from 29.23% of AUM in the Dec-20 quarter to 31.16% in the Mar-21 quarter.

How hybrid fund flows panned out in Mar-21 quarter?

Flows into Hybrid Funds in the Mar-21 quarter (AMFI)
Funds Mobilized Redemptions Net Flow Net AUM as of Mar-21
Rs48,812cr Rs35,757cr Rs13,055cr Rs3.43 trillion

After net inflows of Rs12,500cr in the Dec-20 quarter, hybrid funds saw net inflows of Rs13,055cr in the Mar-21 quarter. Let us look at negative flows first. The big contributor to outflows was aggressive hybrid funds which saw outflows of (Rs5,721cr). Other outflows were much smaller. Arbitrage funds saw positive inflows of Rs13,356 crore in the Mar-21 quarter while dynamic allocation funds saw inflows of Rs5,375cr. Total AUM of all hybrid funds at the end of the quarter stood at Rs3.43 trillion accounting for 10.91% of total mutual fund AUM.

How passive fund flows panned out in Mar-21 quarter?

Flows into Passive Funds in the Mar-21 quarter (AMFI)
Funds Mobilized Redemptions Net Flow Net AUM as of Mar-21
Rs47,633cr Rs27,570cr Rs20,063cr Rs3.22 trillion

Passive funds were the star of the quarter with net inflow of Rs20,063cr. There was traction across all passive categories. Consider the net inflows in the quarter! Index Funds/ETFs Rs3,069cr, Gold ETFs Rs1,779cr, Debt & other ETFs Rs11,715cr and International FOFs Rs3,501cr; dominated passive funds with smartly higher inflows. Passive now contributes 10.23% of total MF AUM.
The big story of the quarter was that; at a tough stage, passive funds have come of age in India.

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