AUM Accretion October 2024 – Net flows versus Price Spike

13 Nov 2024 , 03:36 PM

AUM ACCRETION – OCTOBER 2024 MACRO STORY

Changes in AUM are triggered by flows and market value change. It is interesting to understand how much of the AUM change was driven by net flows and how much by market shifts (rise and fall in equities and bonds). Let us look at the macro story first. Between September 2024 and October 2024; the AUM of open-ended funds went up from ₹66.82 Trillion to ₹66.99 Trillion. That is an actual AUM accretion of ₹16,767 Crore on MOM basis. However, in October 2024, open-ended funds saw net inflows of ₹2,39,907 Crore. This effectively means that the impact of price depletion on AUM in October 2024 was to the tune of ₹(2,23,140) Crore. Why did market movements neutralized almost the entire net inflows in mutual fund in October 2024? It was a month in which the Nifty cracked over 8% resulting in sharp value depletion across active equity funds, passive equity funds, and hybrid funds. In addition, bond yields also went up; which hit longer duration active and passive debt funds too. The depletion of ₹(2.23) trillion was an outcome of this dual impact.

AUM  ACCRETION OF ACTIVE DEBT FUNDS – OCTOBER 2024

Active debt funds in India include a whole range of debt durations. At the long end you have 10-Year G-Sec funds and gilt funds and at the short end you have liquid funds and overnight funds. In this list, we only cover active debt funds, since passive debt funds are clubbed under the passive category. Here is the story of AUM accretion of debt funds in Oct-24.

Active Debt Market Funds	Net Inflow in the Fund	AUM Closing Value	AUM Accretion	Price Accretion	Price Move Dominance
Floater Fund	152.08	52,678.42	537.04	384.97	71.68%
Short Duration Fund	1,362.43	1,15,047.36	1,979.18	616.75	31.16%
Banking and PSU Fund	936.54	78,067.78	1,341.35	404.81	30.18%
Corporate Bond Fund	4,644.40	1,68,100.41	5,530.14	885.74	16.02%
Medium to Long Duration Fund	99.16	11,667.30	112.59	13.43	11.93%
Low Duration Fund	5,600.29	1,12,924.80	6,352.80	752.51	11.85%
Ultra Short Duration Fund	7,053.79	1,07,899.35	7,719.88	666.09	8.63%
Dynamic Bond Fund	514.54	35,073.03	560.92	46.38	8.27%
Money Market Fund	25,303.45	2,50,832.46	26,842.42	1,538.96	5.73%
Liquid Fund	83,863.34	5,27,290.58	86,958.04	3,094.70	3.56%
Overnight Fund	25,783.59	93,589.84	26,315.25	531.66	2.02%
Long Duration Fund	1,117.47	19,341.65	1,065.33	-52.14	-4.89%
Gilt Fund 10-Y Constant Duration	102.91	4,770.66	97.66	-5.24	-5.37%
Gilt Fund	1,375.57	39,714.02	1,304.62	-70.95	-5.44%
Credit Risk Fund	-357.81	21,112.37	-192.50	165.31	-85.88%
Medium Duration Fund	-149.46	25,585.70	-16.31	133.15	-816.16%
Grand Total	1,57,402.30	16,63,695.74	1,66,508.42	9,106.12	5.47%

Data source: AMFI (absolute figures are ₹ in Crore)

Here is what we read from the AUM shift of active debt funds in October 2024.

• Overall, the net AUM accretion of active debt mutual funds in October 2024 stood at ₹1,66,508 Crore. This was composed of ₹1,57,402 Crore of net inflows into active debt funds. However, the price impact was also positive and managed to add another ₹9,106 Crore to the overall active debt funds AUM. Once again, the contribution of price accretion was marginal in October, while it was the net inflows that dominated the AUM accretion for active debt funds in October 2024.
• The positive and negative numbers may not mean much. The key point to note is that the price contribution to AUM change has been positive for floater funds and short term funds, while for longer duration funds, the impact of prices has been negative due to rising bond yields in October 2024.

Let us now look at active equity funds.

AUM  ACCRETION OF ACTIVE EQUITY FUNDS – OCTOBER 2024

Active equity funds in India cover a range from sectoral and thematic funds to active funds based on market capitalization. Here is how the AUM accretion in active equity funds got split between net flows and price movements.

Active Equity Market Funds	Net Inflow in the Fund	AUM Closing Value	AUM Accretion	Price Accretion	Price Move Dominance
Sectoral/Thematic Funds	12,278.78	4,52,461.53	-14,726.39	-27,005.18	183.38%
Multi Cap Fund	3,596.91	1,74,299.91	-5,880.76	-9,477.67	161.16%
Small Cap Fund	3,771.97	3,21,984.81	-6,852.69	-10,624.66	155.04%
Large & Mid Cap Fund	4,857.14	2,61,979.74	-10,829.33	-15,686.47	144.85%
Dividend Yield Fund	532.82	31,921.80	-1,517.57	-2,050.38	135.11%
Value Fund/Contra Fund	2,456.63	1,87,735.88	-7,877.70	-10,334.33	131.18%
Mid Cap Fund	4,682.90	3,81,708.83	-15,300.89	-19,983.79	130.61%
Flexi Cap Fund	5,180.69	4,27,421.65	-16,953.78	-22,134.47	130.56%
Large Cap Fund	3,452.34	3,59,461.12	-19,548.96	-23,001.30	117.66%
Focused Fund	693.16	1,46,863.47	-7,327.51	-8,020.67	109.46%
ELSS	383.36	2,43,426.44	-14,397.85	-14,781.21	102.66%
Grand Total	41,886.69	29,89,265.18	-1,21,213.44	-1,63,100.13	134.56%

Data source: AMFI (absolute figures are ₹ in Crore)

No prizes for guessing, but in the case of active equity funds, it was clearly the price effect that more than neutralized the net flows into equity funds. Here are key takeaways.

• The net depletion in AUM of active equity mutual funds in October 2024 was to the tune of ₹(1,21,213) Crore. This was composed of record ₹41,887 Crore of fresh net inflows into equity funds while the price depletion was to the tune of ₹(1,63,100) Crore. That is hardly surprising considering that the Nifty itself was down 8% in October 2024.
• The key point to note is that the impact has been negative for all the 11 categories of active equity funds. However, the impact of price depletion was substantially higher in the case thematic funds, multi-cap funds and small cap funds; while the impact was less in the case of ELSS funds, focused funds, and large cap funds.

Let us now shift our focus to hybrid funds.

AUM  ACCRETION IN HYBRID FUNDS – OCTOBER 2024

The table below offers a quick impact of price depletion on the overall AUM movement in October 2024. With most hybrid funds trying to mirror equity funds for tax purposes, the impact of price has been severe in the case of hybrid funds too.

Hybrid and Retirement Funds	Net Inflow in the Fund	AUM Closing Value	AUM Accretion	Price Accretion	Price Move Dominance
Dynamic Asset Allocation/BAF	2,456.18	2,83,952.73	-5,149.53	-7,605.71	147.70%
Retirement Fund	207.75	29,987.70	-1,059.45	-1,267.20	119.61%
Children’s Fund	118.45	22,220.81	-670.76	-789.21	117.66%
Aggressive Hybrid Fund	1,370.60	2,21,370.43	-7,926.17	-9,296.77	117.29%
Arbitrage Fund	7,181.70	1,98,981.23	9,118.09	1,936.38	21.24%
Equity Savings Fund	1,747.61	40,603.44	1,057.05	-690.56	-65.33%
Conservative Hybrid Fund	310.51	28,644.00	69.21	-241.30	-348.67%
Multi Asset Allocation Fund	3,796.69	99,116.37	600.61	-3,196.08	-532.14%
Grand Total	17,189.49	9,24,876.72	-3,960.97	-21,150.47	533.97%

Data source: AMFI (absolute figures are ₹ in Crore)

Like in the case of active funds, even in case of hybrid funds, it is the price effect that has dominated. In fact, in October 2024, the price depletion more than neutralized the net flows into hybrid funds. Here are key takeaways.

• The net depletion in AUM of active hybrid funds in October 2024 was to the tune of ₹(3,961) Crore. This was composed of ₹17,189 Crore of fresh net inflows into hybrid funds while the price depletion was to the tune of ₹(21,150) Crore. That is hardly surprising considering that many of these hybrids almost mirror equity performance.
• The key point to note is that the impact has been negative for 6 out of the 7 hybrid categories, with the only exception being arbitrage funds, which is more into the cash-futures spread business. The biggest impact of price depletion was seen in categories like multi-asset allocation funds, Dynamic asset allocation funds (BAFs), and aggressive hybrid funds. Only arbitrage funds saw positive price effects since it mirrors short term bond yields.

Let us now shift our focus to passive funds.

AUM  ACCRETION IN PASSIVE FUNDS – OCTOBER 2024

Finally, let us look at how the AUM shift for passive funds got split between net flows and price movements.

Index and Passive Funds	Net Inflow in the Fund	AUM Closing Value	AUM Accretion	Price Accretion	Price Move Dominance
Index Funds	7,931.01	2,67,824.06	-1,867.16	-9,798.17	524.76%
Fund of funds investing overseas	93.91	25,817.39	-49.02	-142.93	291.57%
Other ETFs	13,441.82	7,82,900.10	-27,372.68	-40,814.50	149.11%
GOLD ETF	1,961.57	44,545.22	4,721.72	2,760.16	58.46%
Grand Total	23,428.31	11,21,086.78	-24,567.14	-47,995.45	195.36%

Data source: AMFI (absolute figures are ₹ in Crore)

Like in the case of active funds, even in case of passive funds, it is the price effect that has dominated. In fact, in October 2024, the price depletion not only neutralized net flows into hybrid funds; but was nearly twice the net flows. Here are key takeaways.

• The net depletion in AUM of passive funds in October 2024 was to the tune of ₹(24,567) Crore. This was composed of ₹23,428 Crore of fresh net inflows into passive funds while the price depletion was to the tune of ₹(47,995) Crore. That is hardly surprising as most of these passive funds are reflections of one of the equity indices.
• The key point to note is that the impact has been negative for 3 out of the 4 hybrid categories, with the only exception being Gold ETFs, which has a low correlation with equity indices. In fact, positive price impact of Gold ETFs was 40% higher than the net inflows resulting in the best AUM accretion among passive funds. Index funds and index ETFs saw substantial price depletion, which more than offset the net inflows.

The correction in stocks and the spike in bond yields has led to a sharply negative price effect across fund classes in October 2024.