The assets under management of India’s top twenty mutual funds declined for the first time in 14 months due to a sharp fall in the benchmark indices and lower sales of equity schemes.
Equity AUMs of domestic mutual funds fell 1.3 percent sequentially in February to Rs 7.8 lakh crore, according to Motilal Oswal's Mutual Fund Tracker. The total asset value of the mutual fund industry also fell 0.9 percent to Rs 22.2 lakh crore.
Indian markets have been under pressure mainly due to the introduction of a new long-term capital gains tax in the Budget and volatility in global stocks as central banks look to tighten policy. The Nifty 50’s 4.9 percent fall in February was its worst sequential decline in two years.
The correction hurt the sale of equity schemes, where inflows fell 26.7 percent to Rs 34,600 crore, the report said. Equity contributes almost half of the total inflows in the mutual fund industry. Income funds and other exchange trade funds saw AUMs decline too.
Market participants chose to stay away from cashing out in February which led to redemptions falling sharply by 42.3 percent over the previous month. As a result, net inflows went up 5.7 percent to Rs 16,300 crore.
The worst hit schemes in February were the HDFC Equity Fund, Reliance Tax Saver (ELSS) Fund, HDFC Top 200 Fund, Franklin India High Growth Companies Fund and HDFC Tax Saver Fund.
- Weightage of technology, telecom, utilities, consumer, metals, automobiles, non-banking financial firms, retail and healthcare increased, while banks, capital goods and oil and gas moderated.
- Infosys, one of the most preffered mutual fund stocks, saw net buying by 15 out of the 20 funds covered.
- Of the top ten stocks that saw erosion of value in February, six were from banking.
- All top 25 schemes closed with lower net asset values compared to the previous month.