HOW EQUITY MARKETS PANNED OUT IN APRIL 2024
The month of April 2024 saw the foreign portfolio investors (FPIs) back to their selling ways. In January 2024, FPIs had sold $3.10 Billion in equities, while February 2204 saw marginal infusion of $186 Million into equities, while in March, the FPIs infused $4.24 billion. However, April against saw FPIs net sellers to the tune of $1.04 billion. Unlike the previous months, the FPIs were net sellers in debt also. Since January, FPI flows into debt were positive on expectations of Indian sovereign debt being included in the global bond indices of JP Morgan and Bloomberg. That story appears to have saturated and played out. As a result, in April 2024, the FPIs were overall net sellers to the tune of $1.95 billion. For calendar 2024 so far, FPIs are still overall net buyers of $7.37 billion, but that is almost entirely coming through debt flows, with FPI equity inflows almost neutral in 2024.
For the month of April 2024, the Sensex closed with gains of +1.13%, while the Nifty 50 index closed with gains of +1.25% higher. Among the other generic indices; Nifty Next-50 index closed +7.05% higher, the Mid-Cap 100 closed +5.81% higher while the Small Cap 100 index closed with +11.40% gains for April 2024. Contrary to March, when the smaller indices were under pressure, April 2024 saw a much sharper revival in the mid and small indices. March was when small and mid-cap funds had a mini-scare after SEBI had come down heavily on funds investing in small and mid-sized stocks. However, that impact appears to have played out, with the market enthusiasm much stronger than regulatory concerns.
HOW BENCHMARK BOND YIELDS TURNED OUT IN APRIL 2024
Despite the US bond markets being volatile in April, the Indian 10-year benchmark bond yields remained in a range of 7.1% to 7.2%, although it is now at a higher plane than the last few weeks. The 10-year benchmark bond yields in India did get close to 7.25% after the Fed clearly indicated that there would only be one rate hike in the year 2024. There is a lot of bond buying demand due to the index inclusion and that is helping the bond yields to remain subdued. The conservative borrowing program in H1 is also a key factor.
However, the bigger question is how would bond yields in India pan out in the coming weeks. Clearly, the US bond yields will be a factor and that is likely to remain elevated with the Fed members veering towards hawkishness. Also, the RBI is not expected to cut rates in the near future, till there is clarity on the outcome of the elections and on the colour of the full budget, which will only be presented in July. The only concern is if the Monsoons again get delayed, it raises question over the Kharif output. If food inflation is going to be back, then bond yields in India could spike. That is still more than a month away!
Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Apr-24):
| Name of Fund | 1-Year Return | 3-Year Return | 5-Year Return |
| Baroda BNP Paribas Large (G) | 41.219% | 21.279% | 19.404% |
| Nippon India Large Cap (G) | 44.075% | 27.121% | 18.856% |
| Canara Robeco Blue-Chip (G) | 32.347% | 17.784% | 18.831% |
| Category Average | 35.550% | 18.335% | 16.036% |
| S&P BSE 100 (TR) Index | 31.390% | 18.556% | 16.406% |
| Data Source: Morningstar | |||
Top performing Direct Plans% (Growth Option) on 5-year returns (as on 30th Apr-24):
| Name of Fund | 1-Year Return | 3-Year Return | 5-Year Return |
| Quant Active Fund (G) | 54.058% | 28.735% | 31.273% |
| Mahindra Manulife Multi (G) | 55.458% | 28.017% | 26.067% |
| Nippon India Multi Cap (G) | 56.519% | 33.737% | 22.600% |
| Category Average | 49.034% | 25.619% | 22.624% |
| S&P BSE 500 (TR) Index | 38.625% | 20.463% | 18.216% |
| Data Source: Morningstar | |||
Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Apr-24):
| Name of Fund | 1-Year Return | 3-Year Return | 5-Year Return |
| Quant Flexi Cap Fund (G) | 60.468% | 33.696% | 32.118% |
| JM Flexi Cap Fund (G) | 67.371% | 31.488% | 25.225% |
| PPFAS Flexi Cap Fund (G) | 38.070% | 22.549% | 24.162% |
| Category Average | 40.934% | 20.398% | 18.109% |
| S&P BSE 500 (TR) Index | 38.625% | 20.463% | 18.216% |
| Data Source: Morningstar | |||
Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Apr-24):
| Name of Fund | 1-Year Return | 3-Year Return | 5-Year Return |
| Quant Mid-Cap Fund (G) | 72.800% | 38.736% | 35.005% |
| Motilal Oswal Mid-Cap(G) | 63.079% | 38.174% | 28.407% |
| Mahindra Manulife Mid-Cap (G) | 66.619% | 30.924% | 28.173% |
| Category Average | 53.804% | 25.927% | 23.808% |
| S&P BSE Midcap (TR) Index | 67.111% | 28.961% | 24.553% |
| Data Source: Morningstar | |||
Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Apr-24):
| Name of Fund | 1-Year Return | 3-Year Return | 5-Year Return |
| Quant Small Cap Fund (G) | 72.673% | 40.229% | 40.670% |
| BOI Small Cap Fund (G) | 56.779% | 30.457% | 34.218% |
| Nippon Small Cap Fund (G) | 62.379% | 36.594% | 32.307% |
| Category Average | 53.670% | 29.497% | 27.629% |
| S&P BSE Midcap (TR) Index | 64.919% | 30.779% | 27.641% |
| Data Source: Morningstar | |||
Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Apr-24):
| Name of Fund | 1-Year Return | 3-Year Return | 5-Year Return |
| Quant Tax Plan (G) | 60.789% | 31.972% | 34.358% |
| BOI ELSS Tax Saver (G) | 56.927% | 26.098% | 27.380% |
| SBI Long Term Equity Fund (G) | 61.670% | 29.584% | 22.843% |
| Category Average | 40.626% | 20.841% | 18.340% |
| S&P BSE 200 (TR) Index | 36.251% | 19.619% | 17.609% |
| Data Source: Morningstar | |||
Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Apr-24):
| Name of Fund | 1-Year Return | 3-Year Return | 5-Year Return |
| UTI Next 50 Index Fund (G) | 64.702% | 23.662% | 19.100% |
| DSP Nifty-50 Equal Weight (G) | 64.779% | 23.773% | 18.855% |
| LIC MF Nifty Next-50 Fund (G) | 64.263% | 23.711% | 18.834% |
| Category Average | 45.878% | 19.725% | 15.591% |
| Benchmark Index | N.A. | N.A. | N.A. |
| Data Source: Morningstar | |||
Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Apr-24):
| Name of Fund | 1-Year Return | 3-Year Return | 5-Year Return |
| Quant Absolute Fund (G) | 39.406% | 24.273% | 26.055% |
| BOI S&M Equity and Debt (G) | 50.486% | 25.499% | 23.324% |
| ICICI Pru Equity & Debt (G) | 41.358% | 26.602% | 21.362% |
| Category Average | 31.616% | 17.299% | 15.653% |
| CRISIL MIF Blended Index PR | 10.810% | 7.324% | 9.092% |
| Data Source: Morningstar | |||
Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Apr-24):
| Name of Fund | 1-Year Return | 3-Year Return | 5-Year Return |
| Kotak Debt Hybrid (G) | 17.692% | 12.171% | 12.794% |
| SBI Conservative Hybrid (G) | 14.905% | 11.095% | 11.435% |
| HDFC Hybrid Debt Fund (G) | 16.463% | 11.865% | 11.006% |
| Category Average | 12.970% | 8.277% | 8.647% |
| CRISIL MIF Blended Index PR | 10.810% | 7.324% | 9.092% |
| Data Source: Morningstar | |||
Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Apr-24):
| Name of Fund | 1-Year Return | 3-Year Return | 5-Year Return |
| HDFC BAF (G) | 40.729% | 26.722% | 19.368% |
| Baroda BNP Paribas BAF (G) | 28.615% | 16.018% | 17.031% |
| Edelweiss BAF (G) | 28.188% | 15.478% | 16.240% |
| Category Average | 26.369% | 13.550% | 12.555% |
| Benchmark Index | N.A. | N.A. | N.A. |
| Data Source: Morningstar | |||
Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Apr-24):
| Name of Fund | 1-Year Return | 3-Year Return | 5-Year Return |
| Quant Multi-Asset Fund (G) | 48.960% | 30.560% | 30.149% |
| ICICI Pru Multi-Asset Fund (G) | 34.684% | 25.599% | 20.435% |
| HDFC Multi-Asset Fund (G) | 24.365% | 16.208% | 15.670% |
| Category Average | 29.579% | 17.624% | 16.545% |
| Benchmark Index | N.A. | N.A. | N.A. |
| Data Source: Morningstar | |||
Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Apr-24):
| Name of Fund | 1-Year Return | 3-Year Return | 5-Year Return |
| Tata Equity Arbitrage (G) | 8.373% | 6.258% | 6.148% |
| Edelweiss Arbitrage Fund (G) | 8.487% | 6.398% | 6.082% |
| Invesco India Arbitrage (G) | 8.436% | 6.543% | 6.074% |
| Category Average | 7.795% | 5.644% | 5.328% |
| Benchmark Index | N.A. | N.A. | N.A. |
| Data Source: Morningstar | |||
Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Apr-24):
| Name of Fund | 1-Year Return | 3-Year Return | 5-Year Return |
| SBI Magnum Gilt Fund (G) | 7.072% | 6.052% | 8.415% |
| ICICI Pru Gilt Fund (G) | 7.834% | 6.396% | 8.339% |
| Edelweiss G-Sec Fund (G) | 7.217% | 5.598% | 8.323% |
| Category Average | 6.581% | 5.029% | 7.110% |
| I-SEC MIBEX Index TR | 6.462% | 5.274% | 7.222% |
| Data Source: Morningstar | |||
Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Apr-24):
| Name of Fund | 1-Year Return | 3-Year Return | 5-Year Return |
| HSBC Corporate Bond (G) | 6.330% | 5.288% | 7.814% |
| ICICI Pru Corporate Bond (G) | 7.676% | 6.143% | 7.468% |
| HDFC Corporate Bond (G) | 7.529% | 5.734% | 7.443% |
| Category Average | 6.737% | 5.161% | 6.616% |
| CRISIL ST Bond Fund Index PR | 7.097% | 5.521% | 6.949% |
| Data Source: Morningstar | |||
Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Apr-24):
| Name of Fund | 1-Year Return | 3-Year Return | 5-Year Return |
| ICICI Pru Credit Risk Fund (G) | 7.942% | 7.169% | 8.249% |
| DSP Credit Risk Fund (G) | 15.924% | 10.377% | 8.097% |
| HDFC Credit Risk Fund (G) | 7.527% | 6.581% | 8.019% |
| Category Average | 7.859% | 9.599% | 5.422% |
| CRISIL ST Bond Fund Index PR | 7.097% | 5.521% | 6.949% |
| Data Source: Morningstar | |||
Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Apr-24):
| Name of Fund | 1-Year Return | 3-Year Return | 5-Year Return |
| Quant Liquid Plan (G) | 7.185% | 5.741% | 5.775% |
| Mahindra Manulife Liquid (G) | 7.395% | 5.666% | 5.357% |
| Edelweiss Liquid Fund (G) | 7.408% | 5.649% | 5.355% |
| Category Average | 6.338% | 4.868% | 4.733% |
| CRISIL Liquid Fund Index PR | 7.329% | 5.704% | 5.463% |
| Data Source: Morningstar | |||
Let us quickly turn to what determined the flows into mutual funds in recent months, and whether these returns were related to the performance of the funds as captured above?
WERE FLOWS LINKED TO PERFORMANCE?
That is a pertinent question to ask here; were the flows in March 2024 determined by the performance of funds. We will take the last 1 year AUM change, as captured in the table below, and try to correlate the AUM shift with the returns. Indian mutual fund AUM tapered in March 2024 to ₹53.40 Trillion due to the sharp sell-off in treasury funds in March 2024.
| Month | Debt AUM
(₹ Trillion) |
Equity AUM
(₹ Trillion) |
Alternate AUM
(₹ Trillion) |
Total AUM
(₹ Trillion) |
| Mar-23 | 11.82 | 15.17 | 12.09 | 39.42 |
| Apr-23 | 12.99 | 15.85 | 12.47 | 41.62 |
| May-23 | 13.49 | 16.57 | 12.85 | 43.20 |
| Jun-23 | 13.48 | 17.43 | 13.22 | 44.39 |
| Jul-23 | 14.17 | 18.25 | 13.69 | 46.38 |
| Aug-23 | 14.00 | 18.60 | 13.74 | 46.64 |
| Sep-23 | 13.05 | 19.08 | 14.17 | 46.58 |
| Oct-23 | 13.54 | 18.79 | 14.10 | 46.72 |
| Nov-23 | 13.58 | 20.33 | 14.87 | 49.05 |
| Dec-23 | 12.91 | 21.79 | 15.78 | 50.78 |
| Jan-24 | 13.77 | 22.50 | 16.17 | 52.74 |
| Feb-24 | 14.50 | 23.12 | 16.62 | 54.54 |
| Mar-24 | 12.62 | 23.49 | 17.02 | 53.40 |
Data Source AMFI
As can be seen in the above table, the overall AUM has grown by 35.5% yoy to ₹53.40 Trillion as of the close of March 2024. This has been triggered by 6.8% growth in debt fund AUM, 54.8% growth in equity AUM and 40.8% growth in alternative assets. The enthusiasm of equity flows and hybrid flows are largely borne out by the performance of these funds. In the case of debt funds, the sharp outflows in March can be attributed to the liquid fund redemptions by corporates to fund advance tax payouts. Having said that, tepid debt fund performance has been a factor in the colour of flows.
KEY TAKEAWAYS FROM THE APRIL 2024 MUTUAL FUND RANKINGS
Here are some key trends we could decipher from the rankings of various categories of mutual funds over different time periods as of end of April 2024.
a. Large cap equity funds, which did better in March 2024, tended to be relatively more tepid in April 2024. However, it was the mid-cap and small cap funds that stood out on one-year returns. Interestingly, large cap funds held their longer period returns, albeit only short-period returns were impacted.
b. The alpha story is quite interesting for the equity funds. The top 3 rankers, across most of the categories of equity funds, have been beating the benchmark index by a margin. Category averages have, however, often underperformed benchmarks.
c. On debt funds, the preference continues to be at the short end of the yield curve rather than the long end. Investors are yet to gain confidence that the RBI will cut rates soon. The cannibalization of liquid funds by arbitrage funds has reduced in April 2024.
d. The biggest takeaway is: that leaders across categories have been substantially consistent. These findings are consistent over a 5-year period. That means; past returns can be a reliable indicator of future performance. This has fund selection implications for retail investors and for financial advisors too.
Amidst the volatility of general elections and geopolitical risk, mutual fund performance has been largely steady in April. The coming months could be a lot more testing!
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