Flexi-cap fund assets cross Rs 2 trn in Q2FY22: Morningstar India

The flexi cap category, introduced a year ago, saw net inflows of Rs 18,258 crore in Q2

Assets under management (AUM) of open-ended funds rose to Rs 36.1 trillion as of September 2021, with inflows to the tune of Rs 1.26 trillion during the second quarter of FY22. The assets have seen a 10 per cent jump over the previous quarter and are up 43 per cent over the year-ago period.

The flexi cap category, which was introduced a year ago, saw net inflows of Rs 18,258 crore in the September quarter (Q2) taking its assets to Rs 2.15 trillion via realignment of funds and new fund launches, a report by Morningstar India said. Its assets are only a shade behind large cap’s assets, which are Rs 2.18 trillion.

Since the creation of the flexi cap category, many AMCs that realigned their existing funds into the flexi cap category have gone on to launch multi-cap funds, while AMCs that retained their funds in the multi-cap category have launched flexi-cap funds.

Equity assets now form 35 per cent of the overall MF assets, next only to fixed income funds which contribute 39 per cent to the asset base. The allocation/hybrid, solution and other categories have approximately 12 per cent, 1 per cent, and 12 per cent weightage respectively.

“After the gradual yet cautious easing of lockdown measures, the Indian economy has shown some signs of recovery. The Indian markets across market caps have seen a sharp bull rally over the past 18 months, albeit with some intermittent corrections, on the back of the ferocious correction witnessed in February-March 2021,” Morningstar India observed in its note.

Open-ended equity schemes saw inflows of Rs 39,928 crore in the second quarter, the highest in the last 10 quarters, with assets totalling Rs 12.79 trillion as of September, up almost 67 per cent from a year ago and up 15 per cent since the first quarter ended June 2021. The category has seen seven consecutive months of net inflows from March2021 to September 2021 after witnessing net outflows for eight consecutive months from July 2020 to February 2021.

Large-cap funds saw net inflows of Rs 528 crore in the September quarter, significantly lower than the net inflows of Rs 1,810 crore seen in the previous quarter. The mid-cap and small-cap categories saw net inflows Rs 3,001 crore and Rs 1,367 crore, respectively, in the quarter ended September.

Environmental, social, and governance as a theme for investing has been getting a lot of traction not only overseas but also in India now. Currently, there are eight open-end funds, one fund of fund, one ETF, and two global funds that follow the ESG philosophy/mandate style of investing. Cumulatively, they witnessed outflows of Rs 97 crore during the quarter ended September 2021.

Open-end fixed-income funds saw net inflows of Rs 10,858 crore in the quarter ended September, taking the total assets under management to Rs 14.16 trillion, 17 per cent higher than last year and 2 per cent higher since the June quarter.

The “Other Schemes" category, which typically has subcategories of ETFs (other and gold), index funds, and funds of funds overseas, has been gaining a lot of traction recently. The category saw net inflows of Rs 33,296 crore in the September quarter.

The second quarter saw new fund offerings (NFO) of a total of 32 open-end funds (including six ETFs) and eleven closed-end funds. Cumulatively, these funds were able to garner Rs 49,283 crore at their inception stage.