January 22, 2024
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MF allocation of funds: Some interesting facts
India ended the eventful CY23 on a high note, with the Nifty delivering 20% returns, marking the eighth consecutive year of a positive return! The expectations of the peaking of the rate hike cycle, moderating inflation, improving liquidity, and consistently rising retail participation in equities, along with strong corporate earnings, drove this performance. FII flows rebounded in CY23 (USD21b of inflows vs. USD17b of outflows in CY22); the domestic flows remained resilient with USD22b of inflows (+USD32b in CY22) amid the hectic primary and secondary market activities.
However, countering the challenges, domestic MFs’ equity AUM rose for the 10th consecutive year to reach INR23.8t (+43% YoY) in CY23. The rise in AUM was fueled by an uptrend in market indices (Nifty: +20% YoY) and higher equity scheme sales (at INR5,386b; +13% YoY). However, redemptions also increased 39% YoY to INR3,323b, leading to a decline in net inflows to INR2,063b in CY23 from INR2,383b in CY22.
The MF industry’s total AUM increased 27% YoY (INR10.9t) to INR50.8t in CY23, propelled by the growth in equity funds (INR7,224b), other ETFs (INR1,255b), balanced funds (INR1,109b), and arbitrage funds (INR595b).
Investors continued to park their money in mutual funds, with inflows and contributions in systematic investment plans (SIPs) reaching a new high of INR176.1b in Dec’23 (up 3.1% MoM and 29.7% YoY).
Some interesting facts
The year saw a notable change in the sector and stock allocation of funds. The weight of defensives improved 120bp to 29.6%, propelled by an increase in the weights of Utilities, Healthcare, and Telecom; while Technology, and Consumer moderated.
The weight of Domestic Cyclicals declined 110bp to 62.1%, pulled down by BFSI, and Chemicals.
Global Cyclicals’ weightage, too, decreased 20bp to 8.2%, led by Oil & Gas.
Capital Goods improved its position to fourth from eighth a year ago, with the weight increasing 130bp to 7.5% in CY23.
The BFSI pack, however, saw a massive 360bp contraction in weight to 29%.
Technology’ position remained unchanged over the last one year, with the weightage moderating 30bp to 9.4%.
Healthcare saw a rise in weight to 6.9% (+60bp YoY) in CY23.
Quicklinks
- Staffavailable.com
- BigGaddi.com
- ChanakyaMFGuidance.com
- Magajmari.com
- AnalysisLibrary.com
- Calls for the Day
