Equity mutual funds hold strong in June despite market uncertainty: Nomura

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Inflows into equity mutual funds held strong in June despite uncertainty in the markets. Net inflows during the month were at Rs 156 billion. It was lower redemptions and a stable systematic investment plan (SIP) book that helped, brokerage firm Nomura has said.

Gross inflows fell sharply by 40 percent from March 2022 but redemptions in June were 34 percent lower from March, said the report that looked into figures for the quarter-ending months of March and June.

Since April, the market has been trending downwards, therefore a comparison of June and March numbers can help trace the investor sentiment over this period.

SIP account additions remained largely unchanged at 1.7 million, having plateaued since September 2021.

The market share of the top seven or eight asset management companies (AMCs) in pure equity has dropped to 46 percent, which, the brokerage said, was the lowest in four to five years.

“Top AMCs (ex-SBI MF) lost a market share of 310bp y-y in May-22 in the pure equity segment. SBI MF is the only AMC among the top-7/8 players to gain market share. That said, m/m market share trends, even for SBI MF, point to a market-share loss, and we believe they warrant monitoring,” Nomura analysts wrote.

SBI MF’s market share in the pure equity segment went up 40 percent year on year (YoY) in FY22 and over 60 percent YoY in May 2022.

The mutual fund also gained in other segments–600bps YoY in May 2022 in the balanced segment and around 160 bps YoY in the liquid segment. One bps is one-hundredth of a percentage point.

HDFC AMC lost a market share of around 100bps YoY in May 2022 despite robust performances of all schemes and Axis AMC lost 70 bps market share but ICICI Prudential Life Insurance continues to hold up well, maintaining market share in most segments, said the report.

“Within the non-equity segment, the debt segment continued to witness outflows of INR 513 bn in Jun-22 and ‘liquid’ funds witnessed net outflows of INR 446 bn. While this is largely seasonal (advance tax related outflows), the non-equity segment has seen INR 2.5tn of net outflows since the past 12 months, restricting overall AUM growth to <6 percent y/y despite equity AUM growth of 15 percent y/y,” the report said.