Mutual Fund Investors Cash In As Redemptions See ‘Massive Rise’ In June

Redemptions in India’s top 20 mutual funds rose to the second highest level this year, even as the industry’s assets under management touched a fresh high.

Equity redemptions in June saw a “massive rise” of 38 percent over the last year to Rs 18,300 crore, leading to a 24 percent sequential fall in net inflows to Rs 8,200 crore, according to brokerage Motilal Oswal’s mutual fund tracker report.

The benchmark Nifty 50 had declined 1 percent in June.

The domestic mutual fund industry’s average assets under management (AUM) increased for the 15th consecutive quarter to a new high of Rs 19.6 lakh crore. Compared to the same quarter last year, AUM rose 35 percent in the April-June quarter, primarily on account of inflows in growth (equity), income and liquid funds, backed by increased participation of domestic investors in equity schemes, the report said.

The equity value of these top 20 asset management companies in June increased 2 percent over the previous month, and 50.1 percent over the same month last year.

Birla Sun Life Mutual Fund recorded the highest increase in value followed by Axis Mutual Fund, SBI Mutual Fund, HDFC Mutual Fund and ICICI Prudential Mutual Fund.

Other Highlights

• The sector and stock allocation of funds went through a notable change in June. The portfolio weight of traditionally defensive sectors like healthcare, consumer, telecom and utilities increased, while that of technology decreased.
• The weight of the oil and gas sector declined for a second straight month.
• The weight of non-banking financial companies reached a new high of 7.2 percent, making it the fourth most allocated sector.
• Kotak Mahindra Bank Ltd. was the most preferred stock as 11 mutual funds were net buyers even after a negative one percent return in June.
• Vedanta Ltd. saw net buying by 12 mutual funds with the stock up 4 percent in June.
• Tata Motors Ltd. and Asian Paints Ltd. were the two favourite stocks with all top 20 mutual funds allocating more than 2 percent weight in their portfolios.