February 23, 2017

Mutual funds exposure in Jan rise highest in second rung large caps

​Here is a story I contributed earlier this week for the organisation I work for presently:

[C] Mutual funds exposure in Jan rise highest in second rung large caps
Cogencis, Tuesday, Feb 21

    By Rajesh Gajra
    NEW DELHI - Second rung of large cap stocks attracted the attention of mutual fund schemes in January compared to the previous month with their exposure increasing at a rate higher than the rise in the market value of the stocks.
    Aggregate assets under management across all equity mutual fund schemes in stocks forming a part of the Nifty Next 50 index went up by 12.4%, or 75.22 bln rupees, month on month to nearly 680 mln as of end of January, data from Cogencis Corporate Fundamental Database showed.
    The on-month rise in Nifty Next 50 was just 8.8% in the same period. A difference between the rate of index value change and the change in the AUM can be ascribed to fresh investments made by the mutual funds from net
inflows across all their equity and equity-oriented schemes, including index ETFs and index funds.
    Reliance Mutual Fund, Birla Sun Life Mutual Fund, DSP BlackRock Mutual Fund and Kotak Mahindra were the most aggressive buyers in the large-cap stocks from Nifty Next 50 in January.
    The Nifty Next 50 index largely represents the second-rung large cap stocks after the Nifty 50's major large cap stocks.
    On the other hand, equity mutual fund schemes' collective AUM in the first rung large cap stocks of Nifty 50 stood at 2.89 trln rupees on Jan 31, up 8.0% on month while the index itself rose by just 4.6% on month (see table below).
    Mid cap stocks were also in demand with aggregate equity mutual fund AUM in Nifty Midcap 50 stocks going up by 7.9% on month to 396.91 bln rupees at the end of January.
    A substantial part of the on-month increase in large cap and mid cap stocks was driven by the deployment of fresh inflows by the Central Public Sector Enterprises Exchange Traded Fund managed by Reliance Mutual Fund.
    The CPSE ETF's follow-on public offer in January had fetched about 60 bln rupees. With inflow turning positive, the CPSE ETF's AUM in Nifty 50 stocks went up 3.4 times on month to 43.27 bln rupees, while its exposure to Nifty Next 50 rose by 3.5 times on month to 29.21 bln rupees and its exposure to Nifty Midcap 50 went up by 3.5 times to nearly 6 bln rupees.
    In the first rung large cap stocks of Nifty 50, besides Reliance Mutual Fund's contribution on account of the CPSE ETF inflow, SBI Mutual Fund, HDFC Mutual Fund and Kotak Mahindra Mutual Fund were seen jacking up their exposure.
    In particular, their schemes such as SBI Magnum Taxgain, SBI ETF Nifty 50, HDFC Prudence, Kotak Banking ETF and Kotak Select Focus saw sharp jumps in exposure to Nifty 50 stocks.
    The second rung large cap stocks from Nifty Next 50 were seen being bought by schemes such as Reliance CPSE ETF, Birla Sun Life Advantage, Birla Sun Life Enhanced Arbitrage, DSP BlackRock Top 100 Equity and Kotak Equity Arbitrage.
    Taking fancy for the mid cap stocks of Nifty Midcap 50 were HDFC Prudence, HDFC Top 200, Birla Sun Life Advantage and Birla Sun Life Equity.
    Mutual funds did not show any enhanced interest in small cap stocks despite the on-month return of 9.0% of Nifty Small Cap 100 being the highest among the four indices.
    The on-month rise in aggregate fund exposure to stocks of Nifty Small Cap 100 was 9.2% as of Jan 31, marginally higher than the 9.0% on-month rise in the index itself.
    Clearly, the month of January belonged to second rung large cap stocks and partly to mid cap stocks as far as change in equity mutual fund investments were concerned.

The table below summarises the aggregate mutual fund AUM in index stocks:
                        AUM on Jan 31        Month-on-month change
                        (bln rupees)        AUM          AUM      Index
                                          (bln rupees)    (%)
                         -----------      ------------   ----     ----
Nifty 50                  2890.86         214.39          8.0     4.6
Nifty Next 50              679.68          75.22         12.4     8.8
Nifty MidCap 50            396.91          29.12          7.9     5.6
Nifty Small Cap 100        146.01          12.29          9.2     9.0

The tables below list mutual funds whose exposure went up considerably:
                               AUM on Jan 31    Month-on-month change
                               (bln rupees)     (bln rupees)    (%)
                                -----------      -------------------
In Nifty 50:
Reliance MF                      286.64         41.34           16.9
SBI MF                           342.15         35.99           11.8
HDFC MF                          455.97         32.93            7.8
Kotak Mahindra MF                115.37         10.22            9.7

In Nifty Next 50:
Reliance MF                       95.26         25.14           35.8
Birla Sun Life MF                 68.55          9.00           15.1
DSP BlackRock MF                  24.35          4.90           25.2
Kotak Mahindra MF                 30.33          3.25           12.0

In Nifty MidCap 50:
Reliance MF                       44.06          6.64           17.7
HDFC MF                           60.87          5.68           10.3
Birla Sun Life MF                 32.38          2.92            9.9
DSP BlackRock MF                  12.22          1.13           10.2

In Nifty Small Cap 100:
Reliance MF                       32.21          3.32           11.5
Birla Sun Life MF                 12.96          1.56           13.7
UTI MF                             6.88          1.21           21.4
L&T MF                             9.27          0.89           10.6


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