88% of top 25 MF schemes close higher in August, Axis Bluechip Fund leads

On an MoM basis, the weights of Technology, Healthcare, Retail,Consumer, NBFCs, and Telecom increased

The Indian mutual fund industry is on a roll! August 2024 was another blockbuster month, with investors pouring a whopping Rs 38,239 crore into equity-oriented funds. That's the second-highest monthly inflow ever, and it marks the 42nd consecutive month of positive inflows. 

Sectoral and thematic funds continue to be the darlings of investors. These funds, which focus on specific sectors or themes, attracted a massive Rs 18,117 crore in August alone. That's over 73% of all new fund offers (NFOs) launched during the month! Investors are clearly excited about the potential returns these funds can offer, from technology and healthcare to infrastructure and renewable energy.

Sector wise weightage: MoM increase seen in Technology, Healthcare, and Retail

Data analysed by Motilal Oswal shows that in August, mutual funds showed interests in Technology, Healthcare, Retail, Consumer, NBFCs, and Telecom, leading to a month-on-month rise in their weights. Conversely, Capital Goods, Private Banks, Utilities, PSU Banks, Automobiles, Chemicals, and Infrastructure saw a MoM moderation in weights. 

Private Banks (15.9%) was the top sector holding for MFs in August 2024, followed by Technology (9.2%), Automobiles (8.6%), and Capital Goods (7.6%).  Retail, Healthcare, Technology, Insurance, and Telecom sectors witnessed the maximum increase in value MoM.

Sectoral allocation of funds: Oil & Gas, Consumer, and Technology under-owned

The top sectors where MF ownership vis-à-vis the BSE 200 is at least 1% lower: Oil & Gas (17 funds under-owned), Consumer (16 funds underowned), Technology (14 funds under-owned), Utilities (14 funds under-owned), and Private Banks (13 funds under-owned). The top sectors where MF ownership vis-à-vis the BSE 200 is at least 1% higher: Healthcare (15 funds over-owned), Capital Goods (14 funds overowned), Consumer Durables (11 funds over-owned), NBFCs (9 funds over-owned), and Automobiles (9 funds over-owned).

Top schemes and NAV change: 88% of the top 25 schemes close higher MoM

Among the top 25 schemes by AUM, the following reported the highest MoM increase: Axis Bluechip Fund (+2.2% MoM change in NAV), ICICI Pru Value Discovery Fund (+2.1% MoM), HDFC Small Cap Fund (+1.9% MoM), Axis Midcap Fund (+1.8% MoM), and HDFC Flexi Cap Fund (+1.7% MoM).

"June saw over Rs41,000 crore  of inflows into mutual funds. Last three months have seen Indian market perform relatively strongly. FPI flows into debt markets have also picked up. Positive FPI flows have helped in achieving record forex levels in the country. 10-year bond yield has declined to just below 7% now vs 7.2% in May," said  Prateek Agrawal, MD & CEO of Motilal Oswal AMC.

Other key highlights 

• Record-Breaking Inflows: Equity funds witnessed net inflows of Rs 38,239 crore, the second-highest monthly figure ever recorded.
• Growing Investor Base: The number of mutual fund folios reached a new high of 20.45 crore, indicating increased investor confidence.
• Sectoral/Thematic Fund Popularity: These funds continued to dominate inflows, with thematic NFOs accounting for 73.8% of total NFO flows.
• Strong Performance: Large, mid, and small-cap funds all witnessed robust inflows.
• Passive Fund Growth: Index ETFs and index funds received Rs 14,599 crore, indicating a growing preference for passive investment strategies.

Factors Driving Inflows:

Market Sentiment: Positive market sentiment and investor confidence contributed to the strong inflows.

Sectoral Opportunities: Thematic funds focusing on sectors with growth potential attracted significant interest.

Shift Towards Large Caps: Investors may have shifted towards large-cap funds for stability and valuation considerations.

SIPs and NFOs:

• SIP Growth: Systematic Investment Plans (SIPs) reached a new peak of Rs 235.5 billion in August, showcasing the increasing popularity of disciplined investing.
• NFO Success: New fund offers (NFOs) garnered Rs 13,815 crore, indicating strong investor interest.