Which mutual fund categories did the best in 2021

  • India Infoline News Service
  • 07 Jan , 2022
  • 8:06 AM
In any particular year, the best performing mutual fund categories give a picture of the underlying trend. One way to look at mutual fund categories is to look at equity categories, debt categories and hybrid categories separately. But that still does not help the ranking because even within equity and debt, funds are as diverse as cheese and chalk in terms of risk profile. The answer is to look at risk adjusted returns for a more meaningful view.

How we can look at risk-adjusted returns?

You can always get into complex areas of risk like standard deviation, variance and Beta, but they have either limited application or can be unnecessarily complex. An intuitively simple yet significant measure of risk is the range factor. Larger the range between the best performing fund and the worst performing fund in the category, greater is the risk.

We start off with the category-wise returns and then adjust the category average returns by the range risk factor. This gives us risk-adjusted returns for each category. What do we understand from risk adjusted returns. They have two implications. The first is whether the number is positive or negative. The second is how they rank internally within the category.

How equity fund categories ranked in 2021?

Firstly, performance outliers are best avoided. FMCG funds are too few and hence the range is small. So, risk-adjusted score looks amplified. In the case of Flexi-Cap, there has been a lot of churn between multi-caps and flexi-caps so some underperformance is understandable.
Equity Categories Category Average Top Performer Bottom Performer Risk Adj Score
Sector - FMCG                18.54                19.36                17.65      191.36
Dividend Yield                35.29                47.27                29.34         57.75
Contra                37.39                51.49                28.27         45.52
Large & Mid- Cap                37.19                48.15                24.99         40.13
Equity- Infrastructure                51.66                83.83                35.29         37.56
Small-Cap                61.25                90.99                28.40         27.79
Sector - Technology                59.79                69.97                21.72         26.91
Large-Cap                27.02                42.24                19.03         22.15
Mid-Cap                42.49                62.18                20.28         20.57
Value                35.30                63.87                22.87         19.69
Equity - ESG                31.37                65.38                21.34         15.20
Multi-Cap                40.49                66.37                16.57         13.47
Focused Fund                32.36                43.55                12.27         12.69
Sector - Healthcare                17.81                28.36                11.24         11.69
Sector - Financial Services                16.03                33.02                11.48           8.54
ELSS (Tax Savings)                32.31                74.10                12.75           6.71
Flexi Cap                31.87                48.28                 -2.17         -1.37
Data source: Morningstar

What is surprising is that in a highly volatile bull-year, dividend stocks turned out outright winners. Like last year, ELSS remains at the bottom due to the vast range of performances but healthcare was close to the bottom, unlike last year, when it was outperformed.

Interestingly small cap funds did quite well while IT funds continued to remain a good performer overall in 2021. In fact, small cap funds and large cap funds outperformed the respective indices even at a median level.

How Debt fund categories ranked in 2021?

It has been a tough year for debt funds as is evident from the average yields given by various debt fund categories. With central banks staying hawkish and bond yields moving up, the long duration funds typically came under pressure.
Debt Categories Category Average Top Performer Bottom Performer Risk Adj Score
Floating Rate 3.62 6.34 1.65           1.27
Money Market 3.54 5.07 0.69           0.56
Credit Risk 8.77 22.18 1.19           0.50
Medium to Long Duration 2.84 9.39 0.03           0.01
Liquid Funds 2.94 4.31 0.01           0.01
10 yr Government Bond 0.97 2.16 -0.03         -0.01
Dynamic Bond 3.32 49.97 -4.27         -0.26
Low Duration 3.73 11.59 -0.89         -0.27
Medium Duration 4.99 17.83 -1.06         -0.28
Short Duration 3.68 12.15 -1.01         -0.28
Long Duration 0.43 4.2 -11.99         -0.32
Government Bond 2.04 7.23 -2.34         -0.50
Corporate Bond 3.13 4.94 -1.22         -0.62
Banking & PSU 3.13 4.47 -15.42         -2.43
Data source: Morningstar

For a change, the floating rate funds emerged at the top of the list . Another surprising name in the top 3 was the Credit risk funds. These funds had been laggards in the last 2 years, faced with a spate of defaults. But, with the general health of Indian paper improving, the strategy of going down the rating curve appears to have worked in 2021.

If you look at the number of debt fund categories giving lower-end returns in the negative, it is clear that it has not been a very easy year for debt funds.

How Hybrid fund categories ranked in 2021?

Here again, we have a small problem with the outlier. With limited Balanced Allocation funds available in India, the risk-adjusted returns have got overstated, making it an outlier.
Hybrid Categories Category Average Top Performer Bottom Performer Risk Adj Score
Balanced Allocation                21.01                28.06                14.04         21.04
Aggressive Allocation                26.15                54.19                13.08           8.32
Equity Savings                12.88                20.03                   4.87           4.14
Dynamic Asset Allocation                14.49                27.65                   3.10           1.83
Arbitrage Fund                   3.83                   7.50                   2.00           1.39
Conservative Allocation                   9.98                21.75                   0.92           0.44
Data source: Morningstar

If you leave out the outlier of Balanced allocation funds, then aggressive allocation funds have done the best and conservation funds the worst. That is hardly surprising if you consider that the higher equity component helped the Aggressive Hybrid category.

What were the key takeaways from the category-wise fund performance in 2021? On the equity side, markets have placed a premium on dividend streams. That also provides a valuation support and these stocks have done extremely well. On the debt side, hawkish rates have hit the long duration funds the most, while floaters did the best.
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June 2022 quarter repeats debt fund selling story

  • India Infoline News Service
  • 01 Aug , 2022
  • 9:47 AM
The quarterly mutual fund flow data for June 2022 quarter published by AMFI shows strong positive inflows across equity and passive fund assets, moderate flows into hybrid assets and strong selling in debt funds. This is a replica of the trend seen in March 2022 quarter. In fact, June 2022 marks the third consecutive quarter that debt fund flows have been negative, clearly showing the pressure of higher bond yields and diminishing returns. The June 2022 quarter once again showed perceptible bias in favour of equity funds and alternate asset funds; while debt funds faced pressure amidst central banks hawkishness.

As of the close of June 2022 quarter, net AUM of Indian mutual funds stood at Rs35.64 trillion, a loss of -5.14% over the March 2022 quarter. Although the flows into equity funds and passive funds were clearly positive, these flow gains were neutralized by the equity market correction which resulted in value depletion. The equity fund AUM accretion in the June 2022 quarter was triggered by net inflows, but the real story was how the passive flows in the quarter caught up with active funds as fund managers struggled to beat the market. Here is the story of mutual fund AUM in the June 2022 quarter and how the flows into specific categories of mutual funds panned out.

How debt fund flows panned out in June 2022 quarter?

Flows into Debt Funds in the Jun-22 quarter (AMFI)
Funds Mobilized Redemptions Net Flow Net AUM as of Jun-22
Rs23.83 trillion Rs24.53 trillion Rs(0.70) trillion Rs12.34 trillion

Indian debt funds saw net redemptions of Rs21,160 crore in December 2021 quarter, which deepened to Rs118,010 crore in the March 2022 quarter. The net outflows for June 2022 quarter was only slightly lower than the previous quarter at Rs70,213 crore. Let us look at the key flow drivers and start with inflows? Only gilt funds with 10 year duration saw inflows of Rs706 crore while long duration funds and gilt funds saw smaller inflows. All other categories of debt funds saw strong outflows in the quarter.

The June 2022 quarter saga of debt fund flows veered towards broad-based redemptions. Short Duration Funds saw outflows of (Rs19,704 crore), Corporate Bond funds (Rs13,785 crore), Floater funds (Rs10,845 crore), Banking & PSU funds (Rs8,098 crore), Money Market Funds (Rs6531 crore), Medium Duration Funds (Rs3,814 crore) and Dynamic Bond Funds (Rs3,349 crore). There were other redemption candidates like medium to long duration funds and credit risk funds, but they were relatively smaller.

Total AUM of all debt funds at the close of the June 2022 quarter stood at Rs12.34 trillion with its overall share of MF AUM higher by 5 basis points compared to March 2022 quarter at 34.63%. Despite the sharp redemptions, the debt fund share has gone up sequentially but that is only because equity funds have seen their market share fall due to index correction.

How equity fund flows panned out in June 2022 quarter?

Flows into Equity Funds in the Jun-22 quarter (AMFI)
Funds Mobilized Redemptions Net Flow Net AUM as of Jun-22
Rs91,773cr Rs41,855cr Rs49,918cr Rs12.86 trillion

After robust inflows of Rs50,363 crore in the June quarter and Rs41,912 crore in the December quarter, the June 2022 quarter saw net inflows of Rs49,918 crore. What is of interest is that not a single category of equity funds witnessed negative flows in June 2022 quarter. Despite the absence of NFOs, the regular flow of SIPs kept the flows steady. The June 2022 quarter, incidentally, is the third straight quarter when not a single equity fund category showed negative flows.

The positive contributors to equity funds were a lot more affirmative. Flexi-Cap funds + Multi-Cap funds saw positive flows of Rs10,735 crore. In addition, there were positive flows into sectoral & thematic funds at Rs7,813 crore, large & mid cap funds Rs6,458 crore, large cap funds Rs5,875 crore, mid cap funds Rs5,233 crore, small cap funds Rs5,102 crore, focused funds Rs4,018 crore and contra funds Rs2,750 crore. Interestingly, the ELSS category also saw inflows in the June 2022 quarter.

The total AUM of equity funds at the end of the June 2022 quarter stood at Rs12.34 trillion reducing its share by 27 bps over March 2022 quarter to 36.08%. The AUM share of equity funds has come down sequentially; largely due to the index depletion that we saw in the June 2022 quarter. However, equity funds have maintained the share lead over debt funds.

How hybrid fund flows panned out in June 2022 quarter?

Flows into Hybrid Funds in the Jun-22 quarter (AMFI)
Funds Mobilized Redemptions Net Flow Net AUM as of Jun-22
Rs49,750cr Rs39,666cr Rs10,084cr Rs4.71 trillion

In June 2022 quarter, hybrid fund inflows nearly doubled over the March quarter at Rs10,084 crore. However, it could have been much better if NFOs had continued in the quarter. This resulted in the absence of incremental NFO flows into the Balanced Advantage Funds (BAF). However, BAFs still dominated June 2022 quarter with inflows of Rs5,590 crore followed by equity aggressive hybrid funds at Rs3,212 crore, equity savings funds at Rs657 crore and multi asset funds Rs594 crore. However, Arbitrage Funds saw net outflows of Rs493 crore in June 2022 quarter, more due to treasury considerations. Total AUM of all hybrid funds at the end of June 2022 quarter stood at Rs4.71 trillion, growing its AUM market share by 53 bps to 13.21% of total mutual fund AUM.

How passive fund flows panned out in June 2022 quarter?

Flows into Passive Funds in the Jun-22 quarter (AMFI)
Funds Mobilized Redemptions Net Flow Net AUM as of Jun-22
Rs58,196cr Rs16,969cr Rs41,227cr Rs5.21 trillion

Passive funds had another fantastic June 2022 quarter with net inflow of Rs41,227 crore, almost at par with the robust March 2022 quarter. There was traction across passive categories. Index Funds/ETFs saw inflows of Rs20,077 crore and other ETFs Rs19,086 crore. Gold funds saw smaller inflows of Rs1,439 crore while FOFs saw inflows of Rs624 crore. Passive funds now contribute 14.62% of total MF AUM; 73 basis points higher than March 2022 quarter.

The big story emanating from the June 2022 quarter mutual funds data, and this is the story of the last few quarters, is that investors are now thinking beyond traditional active equity and active debt funds. If you add up the hybrid funds, solution oriented funds and the passive funds, these have a combined market share of 28.62% of the AUM. Apart from active equities and active debt, these have emerged as the 3rd big asset class for investors. 

Equity fund flows get an NFO boost in February 2023

  • 10 Mar , 2023
  • 4:46 PM
  • For February 2023, inflows into active equity funds remained robust at Rs15,686 crore.

However, flows into active debt funds stayed in the negative. The redeeming feature of the month was the rebound in flows into active equity funds, which did much better in February 2023 compared to hybrid funds and the passive fund categories. February 2023 saw SIPs tapering slightly to Rs13,686 crore, but still robust. Also, new fund offerings (NFOs) were robust in February 2023 collecting Rs7,187 crore across 27 NFOs.

How mutual fund flows panned out in February 2023

Here is a quick look at how the monthly flows across fund categories panned out for the last 13 months. Solutions funds have been combined into hybrid funds.

MonthDebt Fund 
Flows (Rs crore)
Equity Fund 
Flows (Rs crore)
Hybrid Fund 
Flows (Rs crore)
Passive Fund 
Flows (Rs crore)

Total MF Flows

(Rs crore)















































































Data Source: AMFI

What are the quick takeaways from the mutual fund flows data for the last one year? Debt funds saw net outflows in 9 out of the last 13 months while hybrid funds saw net outflows in 7 out of the last 13 months. Both, active equity funds and passive funds saw net inflows in all the 13 months till February 2023. Overall flows of equity funds in the last 13 months stood at Rs1.74 trillion while net inflows into passive funds in the same period stood at Rs1.67 trillion. Active debt funds saw net outflows of Rs2.50 trillion in the same period. Hybrid funds had net outflows in the last 13 months of Rs4,940 crore, largely due to outflows from arbitrage funds. Flows eventually determine the shape of AUM.

How mutual fund AUM shaped up in last one year

The AUM (assets under management) is a combination of inflows and market conditions. While market conditions have been volatile for equity funds, it is more than compensated by the flows from SIPs and NFOs. If you look at the table below, there are 3 broad trends that emerge, especially the shift that is happening in the colour of the AUM.

Firstly, overall AUM has been largely wobbly in a narrow range and has gone up just 5.1% to Rs39.46 trillion in the last one year. During the same period, the debt fund AUM has sharply contracted from Rs14.09 trillion to Rs12.30 trillion, largely due to treasury outflows and concerns over rising rates. This has been made up with expansion of AUM of equity funds and passive alternative funds; where inflows have been consistently robust. The real story is the shift of AUM out of debt and into equity and passive funds.


Debt AUM 

(Rs trillion)

Equity AUM 

(Rs trillion)

Alternate AUM 

(Rs trillion)

Overall AUM 

(Rs trillion)


































































Data Source AMFI

If you sum up the flows story and the AUM story, it is clear that active debt-funds and treasury funds have suffered under conditions of rising interest rates. While equity funds are preferred, investors are seriously looking at passive avenues since they give market returns with much lower expense ratios. The argument is that when it is tough to beat the market, as well stick to passive funds. As Jack Bogle summed it up succinctly, “Why look for a needle in a haystack, when you can buy the entire haystack?”

Active Debt funds: The flow story

Debt fund saw outflows of Rs13,815 crore in the month of February 2023. In the last 13 months debt funds have seen overall outflows of Rs2.50 trillion. The month was obviously dominated by net outflows, but there were some categories that saw inflows too. For instance, Overnight funds saw inflows of Rs2,946 crore, corporate bond funds Rs662 crore, dynamic bond funds Rs502 crore, gilt funds Rs451 crore and short duration funds Rs412 crore.  Let us now turn to the larger list of debt fund categories that saw outflows.

Big selling was visible in Liquid funds Rs11,304 crore, ultra-short duration Funds Rs2,430 crore, low duration funds Rs1,904 crore, Floater Funds Rs1,665 crore, Credit Risk Funds Rs673 crore and money market funds Rs542 crore. There were other funds that also saw selling, but were much smaller. The hawkishness of the Fed and the RBI also hint at higher terminal rates of interest, which is keeping debt fund flows under pressure.

Active Equity Fund flows got a boost from NFOs

Equity fund flows saw net inflows of Rs15,686 crore in February 2023. Let us look at the major driver categories among equity funds. Once again, all the equity fund categories saw net inflows in the month of February 2023. Sector funds saw inflows of Rs3,856 crore, flexi-cap / Multi-cap funds Rs3,779 crore, small cap funds Rs2,246 crore, mid-cap funds Rs1,817 crore, Large & Mid cap funds Rs1,651 crore, ELSS Rs981 crore and value funds Rs713 crore.

Most of the thrust to the equity fund flows came from SIP flows and a slew of NFOs during the month of February 2023. NFOs of multi-cap funds collected Rs1,764 crore, sectoral fund NFOs collected Rs2,540 crore while flexi-cap fund NFOs got Rs744 crore. They accounted for much of the net inflows in these categories in February 2023. Other categories saw inflows of a much smaller scale

Hybrid flows tepid but index funds shine in February

Overall, the combination of hybrid funds and solution funds got net inflows of Rs630 crore on a net basis. Among the hybrid funds, it was the multi-asset allocation funds that saw net inflows of Rs511 crore, while other inflows were smaller. Among the hybrid funds, conservative funds and equity savings funds saw outflows.

Passive funds again had a robust February 2023 with net inflows of Rs6,488 crore. This was driven by inflows into index funds, which saw inflows of Rs6,244 crore during the month of February 2023. In the month of February, there were 11 index fund NFO, but they collected just Rs863 crore overall. Most of the net index fund flows came as investors shifted to passives and more institutional and HNI money coming into index funds. Other categories like gold funds and Fund of Funds (FOF) saw marginal inflows in February 2023.

What we read from the February 2023 mutual fund flows?

Here is a quick summary of the February 2023 fund flows, and there are 3 takeaways.

  1. Equity fund flows continues to be robust despite volatile market conditions. This can be largely attributed to robust inflows via NFOs and SIPs.

  2. Equity and bond index ETFs combined have the highest AUM among all categories as of the close of February 2023 at Rs4.82 trillion. 

  3. Active debt funds have shown some improvement but central bank hawkishness is likely to be a major overhang.


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  • 01 August, 2022 |
  • 10:25 AM

June 2022 marks the third consecutive quarter that debt fund flows have been negative.

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