Redemptions in Nov-19 were at Rs 310 bn vs. Rs 220 bn of run-rate in CYTD19. Credit risk funds continued to see outflows, given increased risk aversion. AUM growth both in equities and overall has turned positive at 13-14% y-o-y on a weak base and strong run-up in markets post-corporate tax rate cuts.
Mutual fund (MF) flows dipped sharply in Nov-19 with a sharp increase in redemptions given the strong rally in the equity markets. Equity net inflows came in at just Rs 3 bn (Rs 80 bn outflows in lumpsum) vs. Rs 70 bn of run-rate in the past six months. While flows in arbitrage funds improved, balanced funds registered a large outflow of Rs 47 bn vs Rs 12 bn outflow run-rate in CYTD19. Debt and liquid inflows of Rs 500 bn were on the back of Rs 1.5 trn of seasonal outflows in Sep-19, but overall debt + liquid AUMs still remain largely muted from Aug-18 levels. Redemptions in equity inched up in the past 2 months with strong market performance netting off improving gross inflow trends.
Redemptions in Nov-19 were at Rs 310 bn vs. Rs 220 bn of run-rate in CYTD19. Credit risk funds continued to see outflows, given increased risk aversion. AUM growth both in equities and overall has turned positive at 13-14% y-o-y on a weak base and strong run-up in markets post-corporate tax rate cuts. Equity flows are moderating and the growth in SIP flows has also moderated and hence remains a key monitorable.
Debt/liquid flows are still not normalising after the liquidity crisis, which is leading to continued run-down in NBFC/HFC funding from MFs. Wholesale NBFCs have seen +50% decline in their funding from MFs and HFCs ex top-2 have seen +80% funding decline from MFs from Aug-18 levels. Note: AMFI has changed its data classification and hence comparisons with previous periods (prior to Apr-19) may not be possible.
A sharp moderation in equity flows
The moderation in equity inflows was led by higher redemptions of Rs 310 bn (Rs 220 bn run-rate in CY19). Gross flows were stable at Rs 184 bn—similar to the full-year trend. But, more importantly the SIP growth is also moderating (up 3.5% y-o-y) and lumpsum flows have remained negative in large part of the past year (Rs 170 bn of outflows in CYTD19).
Debt/liquid flows yet to normalise
Cumulatively, debt/liquid funds have seen an outflow of Rs 1 trn (+8% of debt/liquid AUM as of Aug-18) since the Aug-18 level. The trend does not seem to be normalising still.
Market share trends
> HDFC MF has gained large market share in the liquid segment post Aug-18 and the momentum still continues. Debt and equity segments have seen some market share loss in Oct-19.
> SBI MF has gained 50-300bp market share across all categories, gaining from its distribution reach and brand.
> IPRU MF has also gained market share in debt/liquid segments while losing some market share in equities.
> RNAM (Neutral, TP: Rs 325/share) has started gaining back some of the market share lost in the liquid segment. However, it continues to lose market share in debt and equity segments and that is the key monitorable.