FUND FULCRUM

May 2021

The financial year 2020-21 ended on a positive note for the mutual fund industry. Despite the pandemic, the industry has added 20 lakh new investors and the average AUM of the industry has grown by 30% to Rs.32 lakh crore. The mutual fund industry has added 5.15 lakh new investors in March 2021 taking the total count of unique investors to 2.27 crore in March 2021 as against 2.07 crore in February 2021. The industry’s total folio count has risen to 9.79 crore in March 2021 from 9.62 crore in February 2021. Overall, gross redemptions have come down significantly to Rs.8.73 lakh crore in March 2021 from Rs.15.25 lakh crore in March 2020. However, it has risen on a monthly basis from Rs.5.97 lakh crore in February 2021. After witnessing net outflows for nine consecutive months, equity funds have finally seen net inflows of Rs.9,115 crore in March 2021. On the contrary, debt funds have witnessed net outflows of Rs.52,528 crore in March 2021 as compared to net inflow of Rs.1,734 in February 2021 largely due to redemption from liquid funds. T30 cities have Rs.26.07 lakh crore (83%) of industry’s total AUM while B30 cities have AUM of Rs.5.36 lakh crore. AUM in T30 cities has grown by 39% from March 2020 to Rs.26.07 lakh crore in March 2021 from Rs.18.71 lakh crore in March 2020. Similarly, AUM in B30 cities has risen by 51% to Rs.5.36 lakh crore in March 2021 as against Rs.3.55 lakh crore in March 2020. Average AUM per retail folio has increased by 33% to Rs.1.77 lakh in March 2021 from Rs.1.33 lakh in March 2020. Average AUM per folio of retail investors in both B30 and T30 cities has risen by 35% and 33% to Rs.1.04 lakh and Rs.2.30 lakh in March 2021 from March 2020, respectively. 1,400 individuals have joined the mutual fund distribution business in March. 5,438 ARNs were renewed in March– 3,396 individual distributors, 183 corporates and 1,857 corporate employees. Maharashtra holds the top position in terms of new ARN and EUIN registration with 25.29% followed by Gujarat (12.26%) and Uttar Pradesh (8.35%)

 

The mutual fund industry has witnessed net inflows across categories at the start of new financial year. Overall, the mutual fund industry has witnessed net inflows of over Rs. 92,906 crore led by huge inflows in debt schemes. Overall, equity schemes have witnessed net inflows of Rs.3,437 crore in April 2021. However, net inflows have decreased from Rs.9,115 crore in March 2021. All equity funds except multi cap funds, ELSS, value funds and dividend yield funds have registered net inflows. Sectoral funds have seen the highest net inflows of Rs.1,705 crore followed by mid cap funds with net inflow of Rs.958 crore and large and mid cap funds with net inflow of Rs.707 crore. Number of folios in equity funds has risen by 7 lakh to 9.85 crore in April 2021. Debt funds have witnessed net inflows of Rs.1 lakh crore in April 2021 after net outflows of Rs.52,528 crore in the last month. Significant inflows in debt schemes were due to inflows in liquid funds of Rs.41,507 crore followed by money market funds with net inflows of Rs.20,286 crore. Overnight funds, ultra-short duration funds, low duration funds, floater funds and gilt funds have also witnessed net inflows of Rs. 8,918 crore, Rs. 9,322 crore, Rs. 3,351 crore and Rs. 1,647 crore respectively. On the other hand, the industry has witnessed net outflows in dynamic bond funds, corporate bond funds, credit risk funds, banking and PSU funds and gilt fund with 10-year constant duration. Inflows in hybrid funds have increased to Rs.8,641 crore in April 2021 from Rs.6,210 crore in March 2021. Inflows were led by arbitrage funds with net inflows of Rs.7,245 crore followed by dynamic asset allocation funds with net inflows of Rs.1,700 crore. However, balanced hybrid funds and equity savings fund witnessed net outflows. Gross monthly inflows through SIP came down to Rs.8,590 crore in April 2021 from Rs.9,182 crore in April 2020. SIP folios have grown to 3.79 crore in April 2021from 3.72 crore in March 2021. Overall, SIP AUM has increased to Rs.4.34 lakh crore as compared to Rs.4.27 lakh crore in March 2021. Overall, the mutual fund industry has witnessed net inflow of over Rs. 92,906 crore. The total industry AAUM has grown marginally to Rs.32.42 lakh crore in April 2021 from Rs.32.17 lakh crore in March 2021 largely due to inflows in debt schemes.

 

A review of the AUM report for the quarter ended March 31, 2021 reveals that HDFC MF, SBI MF and ICICI Prudential MF take the first three spots respectively in terms of the average AUM (AAUM) in the debt category. Debt AUM comprises assets from liquid fund/money market fund/floater fund, gilt fund and income/debt oriented funds. HDFC MF topped the list with debt AAUM of Rs. 2.33 lakh crore, which was closely followed by SBI MF’s debt AAUM of Rs. 2.22 lakh crore and ICICI Prudential MF’s debt AAUM of Rs. 2.17 lakh crore. Aditya Birla Sun Life MF and Kotak Mahindra MF occupied fourth and fifth place, respectively. Their respective debt AAUMs stood at Rs. 1.70 lakh crore and Rs. 1.33 lakh crore. Nippon MF, IDFC MF, Axis MF, UTI MF and DSP MF occupied the next five spots.

 

ICICI Prudential MF has the highest direct equity AUM in the mutual fund industry, according to an analysis of monthly AUM disclosure of 30 fund houses. Of the total equity assets of Rs. 97,700 crore, direct equity AUM of the fund house accounts for Rs. 34,000 crore as on March 2021, which is 35% of the total equity assets. HDFC MF and Axis MF follow ICICI Prudential MF in terms of direct equity assets with AUM of Rs. 29,630 crore and Rs. 25,462 crore, respectively. While HDFC MF’s direct equity AUM accounts for 30% of its total equity assets, direct equity assets of Axis MF was 26% of its total equity assets as of March 2021. Next is Kotak Mahindra MF with direct equity AUM of Rs.24000 crore. India’s largest fund house, SBI occupies fifth spot in direct equity AUM with assets of Rs. 23,000 crore. In terms of proportion of direct AUM to the total assets of the fund house, SBI MF tops the chart among top ten fund houses with 58% of its assets coming from direct plan. Of the total assets of Rs.5 lakh crore, the fund house has direct AUM of 2.9 lakh crore. HDFC MF (46%), ICICI Prudential MF (44%), Aditya Birla Sun Life MF (51%) and Nippon India MF (55%) also have a similar share of direct plans in their total AUM. Among the top 30 fund houses, PPFAS MF has the highest direct plan AUM to total AUM ratio at 70%. UTI MF, Mirae Asset MF, Franklin Templeton MF, Sundaram MF, Edelweiss MF, Canara Robeco MF, BNP Paribas MF and Principal MF have comparatively lower dependence on direct plans. Their direct plan AUM to the total AUM ratio was less than 35%. The market share of direct schemes, which was reportedly around 40% in 2009 has risen to 46% in March 2021. SIP accounts under regular plan SIPs may be surviving longer than direct plan SIPs. An analysis of AMFI data shows that 2% of the total SIP accounts in direct plans are over 5 years old as compared to 10% in regular plans. In absolute terms, of the total 90 lakh SIP accounts under direct plan, close to 2 lakh SIPs are over 5 years older. On the other hand, SIPs under regular plans have a better longevity. Of the total 2.80 crore accounts, 27 lakh SIP accounts are older than 5 years. 48% of the total SIP accounts or 43 lakh SIP accounts under direct plans are older than one year. Of the total 2.8 crore accounts, 72% or 2 crore SIP accounts under regular plans are continuing for more than a year. As of March-end 2021, there were around 90 lakh SIP accounts in direct plans. This is 24% of the total SIP accounts. With 2.80 crore accounts, regular plan SIPs have 76% share in the total SIP accounts. A look at the overall SIP figures, including direct and regular gives us a better idea of the longevity of SIPs. Data shows that 8% of the total SIP accounts are over 5 years old. In absolute terms, 29 lakh SIP accounts out of the total 3.70 crore accounts are more than 5 years old. 

 

SBI Mutual Fund, HDFC Mutual Fund and ICICI Prudential are the top three fund houses in terms of B30 penetration as on March 2021, according to an analysis of the monthly average assets under management (AAUM) disclosure of the top 25 fund houses. With assets of Rs.1.12 lakh crore, SBI MF has the highest penetration in B30 cities in absolute terms. The report shows that 22% of its total assets was in B30 location. HDFC MF and ICICI Prudential MF followed SBI MF with assets of Rs. 61,100 crore, and Rs. 57,300 crore, respectively. Aditya Birla Sun Life MF and UTI MF occupied the fourth and fifth positions with average AUM of Rs. 43,700 crore and Rs. 43,300 crore, respectively. Nippon India MF (Rs. 41,200 crore), Axis MF (Rs. 35,700 crore), Kotak Mahindra (Rs. 21,000 crore), DSP MF (Rs. 13,300 crore) and Franklin Templeton MF (Rs. 13,000 crore) occupied the next five spots. In percentage of assets from B30 location, UTI MF has the highest penetration among top ten fund houses with 23% of its assets coming from small cities and towns. Overall, Sundaram MF has the highest percentage of its assets in B30 location with 26% of its assets coming from such locations. Canara MF and Baroda MF followed Sundaram with B30 penetration of 25% and 24% of their total assets, respectively. B30 AAUM comprises equity, debt, balanced schemes, exchange traded fund (gold & others), and fund of funds investing overseas. Overall, B30 cities have accounted for 5.15 lakh crore or 16% of the total MF assets on March 2021. The share of equity and debt in the total B30 AAUM was Rs. 2.92 lakh crore and Rs. 1.64 lakh crore respectively, which formed around 57% and 32%. ICICI Prudential MF was at the top with B30 equity AAUM of Rs. 35,700 crore.

 

Of the total 9.79 crore folios in the MF industry, retail investors held 8.97 crore folios or 90% of the total folios in the MF industry, shows an analysis of AMFI industry data. Currently, the MF industry has in total 2.30 crore unique investors. The share of retail investor accounts was the highest, followed by HNI and institutional investor accounts. Equity-oriented schemes topped in terms of the number of folios with a share of around 68%. They were followed by hybrid schemes and ETFs which contributed around 10% and 6% respectively in the total number of mutual fund accounts. Debt-oriented scheme including gilt took the next spot with around 6% share in the total number. Retail investors held the highest number of accounts across all schemes. While they hold 93% of the total equity folios, their share in debt scheme folios was 64%. Dividing assets managed by the number of accounts for a scheme category gives the average AUM per folio of that scheme. The average AUM per folio of the MF industry was Rs. 3.21 lakh. It was the highest for liquid/money market schemes at around Rs. 18.19 lakh. Debt-oriented schemes including gilt had the second-largest average ticket size of Rs. 15.49 lakh. Notably, both these schemes derived significant shares of their assets from institutional investors. ETFs, FOFs and hybrid schemes have the next largest average ticket of Rs. 4.84 lakh and Rs. 3.64 lakh, respectively. These were followed by index funds where the average AUM per folio stood at Rs. 1.89 lakh. The average AUM per folio of equity-oriented schemes was Rs. 1.50 lakh.  Average AUM per folio of retail investors and HNIs in the MF industry was Rs.71,000 and 9.17 lakh, respectively. AMFI report also suggests that equity assets have a longer average holding duration than their non-equity counterparts. 43.6% of the industry’s equity assets were held for more than 24 months of which 55.3% was held by retail investor.

 

 

 Piquant Parade

 

India's largest mutual fund distributor NJ India Invest has received SEBI’s final go ahead to launch mutual fund business in India, NJ India Mutual Fund. The fund house is yet to apply for SEBI's approval for launching a mutual fund scheme. Headquartered in Surat, NJ India Invest is India's largest mutual fund distributor. The company was started by Neeraj Choksi and Jignesh Desai in 2003.

 

Online investment platform Groww is about to enter the mutual fund business. The digital platform has signed a deal to acquire Indiabulls Mutual Fund for Rs 175 crore. The deal includes a cash equivalent of Rs 100 crore and is subject to regulatory approvals by SEBI. The billion-dollar startup expects the deal to conclude by June 30, 2022. If the deal gets regulatory approval, Groww will become the first fintech player to enter the asset management space. Groww claims it has 15 million users, with 250,000 SIPs opened every month on its platform. As of March 2021, Indiabulls MF was managing assets worth Rs 664 crore.

 

To be continued…