Dec-21 quarter sees strong flows into equity and hybrid funds

3 Feb 2022 , 09:25 AM

The quarterly mutual fund flows data for Dec-21 quarter published by AMFI shows positive inflows across equity, hybrid and passive fund assets. However flows were negative in debt funds. In terms of specific categories of flows, equity funds and passive funds dominated the inflows while hybrid funds saw lower inflows. The Dec-21 quarter evinced a clear flow bias in favour of equities and alternate asset funds; while being cautious on debt funds.

As of the close of Dec-21 quarter, net AUM of Indian mutual funds stood at Rs37.73 trillion, a gain of 2.7% over Sep-21 quarter. Much of the flow gains were neutralized by the equity market volatility. Average net AUM stood at Rs37.92 trillion. The equity fund AUM accretion in the Dec-21 quarter was triggered by net flows, with negative returns on Nifty and Sensex. Let us look at how MF AUM picked up at the end of Dec-21 quarter.

As of the Dec-20 quarter, the AUM of Indian mutual funds stood at Rs31.02 trillion. From that point, AUM has grown 21.6% to Rs37.73 trillion. However, this AUM accretion has been driven by a mix of positive flows and gains in the Nifty and Sensex yoy.  Here is how flows into specific categories of funds panned out in the Dec-21 quarter.

How debt fund flows panned out in Dec-21 quarter?

Flows into Debt Funds in the Dec-21 quarter (AMFI)
Funds Mobilized	Redemptions	Net Flow	Net AUM as of Dec-21
Rs22.45 trillion	Rs22.66 trillion	Rs(0.21) trillion	Rs14.05 trillion

During the year 2021, debt funds saw net redemptions of Rs84,202cr in Mar-21 quarter, net inflows of Rs59,957cr in Jun-21 quarter and subdued net inflows of Rs10,858cr in the Sep-21 quarter. In comparison, debt funds saw net redemptions of Rs21,160cr in Dec-21 quarter. What were the big flow drivers in the Dec-21 quarter? Liquid funds dominated inflows in the Dec-21 quarter at Rs34,364cr followed by dynamic bond funds at Rs2,089cr. Other inflows were relatively small.

The Dec-21 quarter story on debt fund flows was tilted towards redemptions. For instance, Low Duration Funds saw outflows of (Rs13,518cr), Banking & PSU funds (Rs11,662cr), corporate bond funds (Rs9,774cr), ultra-short duration funds (Rs8,374cr), floater funds (Rs6,580cr) and short duration funds (Rs4,213cr). There were other sell candidates, but with relatively smaller net redemptions in the Dec-21 quarter.

Total AUM of all debt funds at the close of the Dec-21 quarter stood at Rs14.05 trillion with its overall share of MF AUM falling by 129 basis points over Sep-21 to 37.24%. Over the last one year, the share of debt funds in overall MF AUM has slipped by nearly 830 basis points.

How equity fund flows panned out in Dec-21 quarter?

Flows into Equity Funds in the Dec-21 quarter (AMFI)
Funds Mobilized	Redemptions	Net Flow	Net AUM as of Dec-21
Rs100,567cr	Rs58,655cr	Rs41,912cr	Rs13.34 trillion

Equity funds in the Dec-21 quarter saw net inflows of Rs41,912cr, marginally higher than Sep-21 quarter. What were the big contributors to this flow? Interestingly, there was not a single category of equity funds that saw negative cumulative flows in the Dec-21 quarter as a combination of SIPs and NFOs kept the interest robust in equity funds.

The positive contributors to equity funds were a lot more affirmative. Flexi-Cap funds + Multi-Cap funds saw positive flows of Rs17,453cr largely on the back of NFOs. In addition, there were positive flows into sector funds Rs7,026cr, large cap funds Rs3,899cr, focused funds Rs3,715cr, large & mid cap funds Rs3,515cr, mid-cap funds Rs3,3335cr and small cap funds Rs2,155cr. Remaining categories of equity funds saw smaller net inflows.

The total AUM of equity funds at the end of the Sep-21 quarter stood at Rs13.34 trillion increasing its share by 52 bps over Jun-21 quarter to 35.35%. The AUM share of equity funds has gone up sharply by 550 basis points over previous year and the market share gap with debt funds is now the lowest ever for equity funds.

How hybrid fund flows panned out in Dec-21 quarter?

Flows into Hybrid Funds in the Dec-21 quarter (AMFI)
Funds Mobilized	Redemptions	Net Flow	Net AUM as of Dec-21
Rs66,511cr	Rs46,088cr	Rs20,423cr	Rs4.71 trillion

In Dec-21 quarter, hybrid funds could not sustain the excitement of the Sep-21 quarter, but still did extremely well in terms of inflows. Of course, unlike the Sep-21 quarter, there was no SBI MF Balanced Advantage Fund NFO in the Dec-21 quarter. In terms of break-up, BAFs still dominated Dec-21 quarter with inflows of Rs21,019cr followed by equity savings funds Rs2,068cr, conservative hybrids Rs1,225cr and aggressive hybrids Rs1,095cr. However, Arbitrage Funds saw net outflows of Rs5,601cr in Dec-21 quarter.

Total AUM of all hybrid funds at the end of Dec-21 quarter stood at Rs4.71 trillion, growing its AUM market share by 22 bps to 12.47% of total mutual fund AUM.

How passive fund flows panned out in Dec-21 quarter?

Flows into Passive Funds in the Dec-21 quarter (AMFI)
Funds Mobilized	Redemptions	Net Flow	Net AUM as of Dec-21
Rs54,867cr	Rs14,378cr	Rs40,489cr	Rs4.72 trillion

Passive funds had another fantastic quarter with net inflow of Rs40,489cr, a sharp increase over the Sep-21 quarter net inflows. There was traction across passive categories. Index Funds/ETFs Rs11,551cr, Gold ETFs Rs1,229cr, Debt & other ETFs Rs25,461cr and International FOFs Rs2,178cr; dominated passive fund inflows. Passive funds now contribute 12.52% of total MF AUM; 70 basis points higher than Sep-21 quarter.

What really stands out in the Dec-21 quarter flows is that, apart from traditional equity fund flows; hybrids and passive funds are fast emerging as viable alternatives for investors. Of course, debt funds continue to lose market share in overall AUM. That was the big story of Dec-21 quarter flows into mutual funds.