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

Illustration: Binay Sinha

4 minutes of reading Last update: 13 Sep 2024 | 14:04 IST

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

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

Sector Shares: Month-over-month growth for technology, healthcare and retail

Data analysed by Motilal Oswal shows that in August, mutual funds showed interest in technology, healthcare, retail, consumer, NBFCs and telecom, which led to an increase in their weightings on a monthly basis. Meanwhile, capital goods, private banks, utilities, PSU banks, autos, chemicals and infrastructure saw moderation in weightings on a monthly basis.

Private banks (15.9%) was the largest sector holding mutual funds in August 2024, followed by technology (9.2%), autos (8.6%) and capital goods (7.6%). Retail, healthcare, technology, insurance and telecom sectors saw the largest month-on-month gains in value.

Allocation of funds by sector: underinvested oil and gas, consumer goods and technology

Top sectors where MFs’ weighting vis-à-vis BSE 200 is lower by at least 1%: Oil & Gas (17 funds under-covered), Consumer (16 funds under-covered), Technology (14 funds under-covered), Utilities (14 funds under-covered) and Private Banks (13 funds under-covered). Top sectors where MFs’ weighting vis-à-vis BSE 200 is higher by at least 1%: Healthcare (15 funds over-covered), Capital Goods (14 funds over-covered), Consumer Durables (11 funds over-covered), NBFCs (9 funds over-covered) and Autos (9 funds over-covered).

Top programs and change in net asset value: 88% of top 25 programs close with higher monthly results

Among the top 25 funds in terms of assets under management, the following recorded the highest month-on-month growth: Axis Bluechip Fund (+2.2% month-on-month change in NAV), ICICI Pru Value Discovery Fund (+2.1% month-on-month), HDFC Small Cap Fund (+1.9% month-on-month), Axis Midcap Fund (+1.8% month-on-month) and HDFC Flexi Cap Fund (+1.7% month-on-month).

“Mutual fund inflows stood at over Rs 41,000 crore in June. The last three months have seen a relatively good performance in the Indian market. FPI inflows into debt markets have also picked up. Positive FPI flows have helped the country reach record currency levels. The 10-year bond yield has come down to just below 7% now, from 7.2% in May,” said Prateek Agrawal, Managing Director and CEO, Motilal Oswal AMC.

Other key events

Record inflows: Equity funds recorded a net inflow of Rs 38,239 crore, the second-highest monthly amount ever.

Growing investor base: The number of mutual funds touched a new record of 20.45 crore, indicating growing investor confidence.

Popularity of sector/thematic funds: These funds continue to dominate inflows, with thematic NGOs accounting for 73.8% of total NGO fund flows.

Strong performance: Large-cap, mid-cap and small-cap funds saw significant inflows.

Growth in Passive Funds: Index ETFs and index funds received Rs 14,599 crore, indicating growing interest in passive investment strategies.

Factors influencing inflows:

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

Sector opportunities: Thematic funds focusing on sectors with growth potential have enjoyed strong interest.

Shift towards large-caps: Investors may shift towards large-cap funds due to their stability and valuation.

SIP and NFO:

SIP growth: Systematic investment plans (SIPs) hit a new high of Rs 235.5 billion in August, reflecting the growing popularity of disciplined investing.

NFO success: New fund offerings (NFOs) raised Rs 13,815 crore, indicating strong investor interest.

First published: 13 Sep 2024 | 14:03 IST