Mutual Fund Update: Equity AUM for September 2018

Bucking the overall trend of the mutual fund industry, equity MF received more than Rs. 10,000 crore in the month of September 2018, which was highest in the last four month. Nevertheless, the total asset under management (AUM) of equity dedicated fund declined by 6.6 per cent sequentially to Rs. 8 lakh crore. In the previous two months that is in July and August 2018 equity AUM grew by 5.4 per cent and 3.6 per cent, respectively.

The fall in equity AUM can be attributed to the volatile market condition that saw major indices falling by more than 6 per cent in the month of September. While equity scheme sales declined 3.1% on a sequential basis to Rs. 27,400 crore, redemptions fell sharply by 27.8 per cent in the same period to Rs. 16,100 crore. Net inflows, thus, rose from Rs. 5,900 crore in August to Rs. 11,300 crore in September.

This net increase in equity inflows and fall in the equity market indices led to an increase in the equity AUM, as a percentage of India’s market capitalization. At the end of September 2018, it is at an all-time high of 5.6 per cent up by 60 basis points on a yearly basis.

The recent fall in the NBFC shares had its implication and is reflected on their holdings by the mutual fund. On a sequential basis, the weights of Technology, Oil & Gas, Metals and Healthcare increased, while those of NBFCs, PSU banks, Infrastructure, Capital Goods, Media and Telecom moderated. Technology sector’s weight reached a 28-month high of 9.5 per cent up by 80 basis points on monthly basis and 290 basis points on yearly basis. As a result, IT now becomes the second most owned sector among the mutual funds. A year back it was at the sixth position. Defensives’ weight rose to a 31-month high of 29.1 per cent (+110bp MoM), as the weight of Technology and Healthcare increased, while that of Telecom moderated. Domestic Cyclicals’ weight touched a new low of 59.6 per cent.