Flexi-cap becomes biggest category in open-ended equity segment: Report
Premium- Multi-cap fund too has been witnessing steady growth with the category having a total AUM of ₹42,860 crore at the end of December quarter
In a little over a year since its introduction, flexi-cap funds have accumulated the highest assets in the open-ended equity category with a corpus of ₹2,22,319 crore at the end of December quarter, surpassing large-cap funds with assets under management (AUM) of ₹2,21,835 crore, according to a report by Morningstar India.
An open-ended fund or scheme is one that is available for repurchase and subscription continuously.
In November 2020, the Securities and Exchange Board of India (Sebi) had launched a flexi-cap category, requiring funds under this classification to invest at least 65% of their corpus in equity but without any restrictions on whether they can invest in large-, mid-, or small-cap stocks.
This came after the markets regulator in September introduced new norms for asset-allocation rules for multi-cap funds, mandating a minimum 25% allocation each in large-, mid-, and small-cap stocks.
Following the changes, most funds moved to the flexi-cap category, with just a few funds choosing to stay in the restrictive multi-cap category.
Multi-cap fund too has been witnessing steady growth with the category having a total AUM of ₹42,860 crore at the end of December quarter against assets worth ₹19,891 crore at the end of March 2021 quarter.
During the third quarter of fiscal year 2021-22, the flexi-cap category had net inflows worth ₹6,191 crore, which was the third-highest among the open-end equity categories. The flexi-cap category now has 17% of the overall assets of open-end equity funds. In 2021, the category had cumulative net inflows of INR 17,882 crore.
On the other hand, large-cap funds experienced net inflows worth ₹3,950 crores in third-quarter fiscal year 2021-22, which was significantly higher than the net inflows in the previous quarter at ₹528 crore.
Overall, the AUM of open-ended funds stood at ₹37,11,433 crore as of December 2021 up by almost 3% compared to the last quarter September 2021 and up 26% compared with December 2020.
The Morningstar report also highlighted that the third quarter of fiscal-year 2021-22 saw the new fund offering (NFO) of a total of 37 open-end funds (including exchange-traded funds) and six closed-ended funds.
Cumulatively, these funds were able to garner ₹31,055 crore at their inception stage. In 2021, there were 140 new fund offers (including closed-end funds and ETFs). These managed to garner ₹99,704 crore during their inception stage.
Asset management companies that experienced the highest net inflows (open-end and ETFs) in the third quarter of fiscal year 2021-22 were SBI Mutual Fund, with flows of ₹25,892 crore; Edelweiss with ₹11,303 crore; Axis with ₹6,825 crore, and ICICI Prudential with ₹4,937 crore.
Fund houses that had the highest net outflows were L&T Finance with ₹4,763 crore, IDFC with ₹4,604 crore, and Aditya Birla Sunlife with ₹4,093 crore.
The fixed-income category had net outflows of ₹21,277 crore in the third-quarter compared with net inflows of ₹10,858 crore received in the earlier quarter. This was a result of net outflows of ₹49,154 crores in December.
In terms of environmental, social, and governance (ESG) funds, Morningstar India said that the theme has been getting a lot of traction not only overseas but also in India.
“Currently, there are eight open-end funds, one fund of fund, one ETF, and two global funds that follow the ESG philosophy/mandate style of investing. Cumulatively, they had outflows of ₹141 crore during the quarter ended December 2021 and net inflows of ₹986 crore during 2021, the report said.
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