A strong wave of new fund offerings (NFOs) boosted equity fund inflows in December 2021.
NFO collections of Rs 206.2 billion were more than the combined flows in the previous 3 months. However, the flows in December were lower than the record flows in July. To put things in context, in the past 6 months, NFO flows have surged more than Rs 800 billion.
For example, investors have become accustomed to the trend to buy with every correction. This led investors to allocate Rs 250.8 billion to equity funds in December 2021, the highest monthly net inflow into such funds to date.
In the previous month, the net inflow was Rs 116.1 billion. This was also the 10th consecutive month of influx. As of March 2021, equity funds saw a cumulative net inflow of Rs 1,104.6 billion.
Systematic Investment Plans (SIPs) continue their trend as their collections rose to Rs 113.1 billion in December 2021, from Rs 110.1 billion in November. The number of mutual fund SIP accounts was 49 million in December 2021, compared to 47.8 million in November.
It was the first time in September 2021 when SIPs crossed the 100 billion mark. That trend has now been extended to the fourth month. As the markets have been volatile over the past two months, pushing investors on the brink of the Omicron variant, they have allotted more to their SIP contribution.
Investors stuck to their trial by tracking their SIPs, which only shows their long-term bullishness and wealth creation journey. Since the start of this fiscal year, monthly SIP flows have shown a secular increase. From Rs 85.7 billion in April 2021, the figure now stands at Rs 113 billion.
While all is well on the stock front, debt funds tell a different story. Due to redemptions of Rs 491.5 billion from debt funds, the sector’s assets under management (AUM) fell marginally to Rs 37,920 billion in December 2021, from Rs 38,450 billion in the previous month.
Debt funds reportedly saw an outflow due to quarter-end requirements and investors disappointed by poor returns and assuming interest rates are likely to rise in the coming year.
Let’s take a look at which stocks of mutual funds were traded the most during this period…
Top Shares Sold by Mutual Funds in December 2021
large caps: Indian mutual funds reduced their positions in large-cap stocks such as PB Fintech, Macrotech Developers, Hindustan Zinc, Nykaa and Eicher Motors.
There was also a lot of sales in Adani Green Energy.
center cap: From the midcap space, mutual funds discharged Vodafone Idea, Yes Bank, Bank of India and Indian Energy Exchange (IEX).
small caps: RBL Bank, PNB Housing Finance, Latent View and BSE saw maximum sales by MFs from the small cap space in December 2021.
Interestingly, BSE was also on the list last month. Mutual funds have scaled back their stake after a sharp rise in share prices.
Top stocks bought by mutual funds in December 2021
large caps: When IRCTC, Indus Towers, Paytm and Tata Power came out of the large cap space, they witnessed a massive influx.
center cap: From the mid-cap space, fund managers loaded up shares of CRISIL, IndiaMART InterMESH, Indian Hotels, L&T Finance and Tata Communications.
small caps: HFCL, Data Patterns, Graphite India and Go Fashions were the top small-cap buys.
Top Equity Mutual Funds in December 2021
Here is the list of top 10 mutual funds by their own funds under management (AUM) as of December 2021.
What India’s best mutual funds bought and sold in December 2021
• SBI Investment Fund
India’s largest equity fund held Rs 3,702 billion in shares as of December 2021.
The fund’s top four stock holdings are HDFC Bank, Reliance Industries, Infosys and ICICI Bank.
This is what SBI Mutual Fund bought and sold in December 2021.
• ICICI Prudential Mutual Fund
ICICI Prudential Mutual Fund is the second largest equity fund with Rs 2,053 billion worth of shares as of December 2021. The same figure in the month of November was Rs 1,995 billion.
The top three shareholdings of ICICI Prudential Mutual Fund include ICICI Bank, Infosys and Bharti Airtel.
This is what the fund bought and sold in December 2021.
• HDFC Mutual Fund
Following on from ICICI Prudential Mutual Fund, as of December 2021, we have HDFC Mutual Fund with Rs 1,837 billion worth of shares.
The fund’s top five shareholdings include ICICI Bank, State Bank of India, Infosys, HDFC Bank and Reliance Industries. It also has good exposure to L&T.
This is what HDFC Mutual Fund bought and sold in December 2021.
As co-head of Research at Equitymaster Rahul Shah rightly says, it is always better to take only 50% exposure and keep the rest in FDs or cash. This strategy came to the rescue in both November and December 2021.
Investors who had money waiting on the sidelines used the market correction as an opportunity and spent it on equity funds.
2021 was a year of NFOs. Investors fell head over heels towards mutual funds as the sector added a staggering Rs 7 lakh crore to their asset base. Asset management companies (AMCs) launched more than 100 NFOs with various investment ideas, further leading to the rise in the AUM.
This was all due to the good sentiment in the equity markets.
The mutual fund industry AUM grew 24% to an all-time high by November 38,450 itself, from Rs 31,000 billion at the end of December 2020.
Gold Exchange Traded Funds (ETFs) also attracted investors with net inflows of over Rs 45 billion in 2021.
In December 2021, mutual funds acquired over Rs 30 billion worth of shares in the Initial Public Offering (IPO). At a time when FIIs were selling big, mutual funds came to the rescue.
Rs 33.8 billion was invested in new issues launched in December 2021. MedPlus Health received the highest inflow of Rs 13 billion, followed by CMS Info Systems (Rs 3 billion), Metro Brands (Rs 3 billion), Tega Industries (Rs 2.8 billion) and RateGain Travel (Rs 2.5 billion).
Other issues from Anand Rathi, CE Info Systems, Data Patterns, Supriya Lifescience, Shriram Properties and Star Health also received good inflows.
Mutual funds growing big on IPOs is the trend we’ve been seeing for months now.
How the buying and selling trend of mutual funds will develop in the month of January 2022 remains to be seen.
We will keep you informed of all developments from this space.
Stay tuned.
Since you are interested in what mutual funds buy and sell, take a look at Equitymaster’s powerful stock screener.
This tool keeps track of the shares recently bought by mutual funds along with the shares recently sold by them.
Have fun investing!
PS: The above piece is based on data from PersonalFN. PersonalFN is a Mumbai-based personal finance company that provides financial planning and mutual fund research services.
Disclaimer: This article is for informational purposes only. It is not a stock recommendation and should not be treated as such.
(This article is from Equitymaster.com)
(This story was not edited by DailyExpertNews staff and was generated automatically from a syndicated feed.)