The Indian mutual fund segment did see equity flows compressing in June 2020 but that was partly compensated by the value accretion. There have been some changes in the MF sweepstakes in the last few months. For example, SBI has moved to the top of the AUM charts, although it has been the largest equity fund manager for a long time. During the Jun-20 quarter, the largest depletion in AUMs was seen by Birla MF and Templeton MF; both of whom had large exposures to vulnerable debt. In fact, due to the winding up of six of its schemes, Templeton saw its AUM dip sharply below Rs80,000cr.
We look at what the three largest AMCs bought and sold during June 2020, which gives a representative idea about what stocks and sectors the mutual funds are buying or selling.
What SBI Mutual Fund bought and sold in June 2020
In the last few months, SBI MF has emerged as the largest by overall AUM overtaking HDFC MF and ICICI Pru MF along the way. SBI MF currently manages close to Rs182,000cr across its equity schemes and is invested in over 330 stocks. The portfolio of SBI MF is dominated by financials with an exposure of 39% followed by IT at 9.5%.
During the month of June 2020, SBI MF made fresh purchases in Torrent Power and India MartIntermesh. While Torrent Power has been among the better performers in the power sector, India Mart was listed only in 2019 and has been one of the top performers post listing. It remains one of the few profitable digital plays available in India. SBI MF also made some notable exits in the financial sector. It fully exited its exposure to South Indian Bank and IDFC during the month. It also exited NLC India, which has seen its performance falter in the last few quarters.
SBI MF also made some notable accretions and reductions. It did some bottom fishing adding positions in Vodafone and Power Grid. It also topped up its positions in Emami, after the company made serious attempts to come out of its debt trap. SBI MF also made some strategic reductionsin Cholamandalam Investments due to strain in the financial sector. SBI MF also cut down on ITC and UPL over valuation concerns after prices had rallied sharply.
What HDFC Mutual Fund bought and sold in June 2020
HDFC MF was one of the most aggressive buyers during Jun-20 as it used lower levels to reduce its cost of holdings. HDFC MF is another formidable player with Rs167,000cr of its overall AUM invested in equities. Financials account for 35% of its AUM while industrials account for a good 14%.
HDFC MF made a big healthcare bet during the month lapping up over 8.3 million shares of Aster DM Healthcare. It also took fresh positions in L&T Finance, although the stake is not too significant. HDFC MF has undertaken a total restructuring of its portfolio and has exited smaller penny stocks like Nila Spaces, Jain Irrigation and IFCI to avoiding locking up capital.
There have been interesting additions made by HDFC MF. It made a huge purchase in NLC India, even as SBI MF was selling. HDFC MF also added to its positions in Shriram Transport Finance and BHEL, expecting BHEL to play a major role in the “Make in India” design of the Indian government. HDFC MF also reduced its stake in two PSUs viz. GAIL and NHPC, where the stock performance has been quite disappointing. It also pared down its stake in Yes Bank ahead of the proposed FPO.
What ICICI Prudential Mutual Fund bought and sold in June 2020
ICICI Pru MF manages close to Rs144,000cr in equity funds and remains a significant player in the fund management business. Out of its total AUM, ICICI Pru MF has nearly 29% invested in financials and 10% in materials.
In terms of total exits, ICICI Pru did not exit any of its domestic positions totally. However, it made some fresh purchases. Like SBI MF, ICICI Pru MF also bought into India Mart Intermesh and also took fresh positions in Arvind Fashions ahead of its deal with Flipkart.
During the month of June 2020, ICICI Pru added to its positions in NLC India and also in South Indian Bank. Ironically, both these stocks were in the sell-list of SBI Mutual Fund. Like HDFC MF, even ICICI Pru MF turned out to be a major seller in PSU stocks reducing its stake in Power Grid and NTPC. It also reduced its stake in Suzlon, despite the recent restructuring of debts completed by the company.
Broadly, Indian mutual funds have used the correction to conduct a strategic restructuring of their portfolios. That should be a positive from a medium term perspective.