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Total assets under flexi-cap category rise to 1.59 tn, highest after large-cap funds

In November 2020, the Securities and Exchange Board of India had launched a “flexi-cap” category for mutual funds, requiring them to invest at least 65% of the corpus in equity but having no restriction on investing in large-, mid-, or small-cap stocks. (istockphoto)Premium
In November 2020, the Securities and Exchange Board of India had launched a “flexi-cap” category for mutual funds, requiring them to invest at least 65% of the corpus in equity but having no restriction on investing in large-, mid-, or small-cap stocks. (istockphoto)

  • Total assets under the newly created category stood at Rs1,58,725 crore as of March end and constituted 16% of the overall assets of open-end equity funds

NEW DELHI : Total assets under the newly created flexi-cap category stood at Rs1,58,725 crore as of March end and constituted 16% of the overall assets of open-end equity funds, second only after large-cap funds, a report by Morningstar India showed.

In November 2020, the Securities and Exchange Board of India (Sebi) had launched a “flexi-cap" category for mutual funds, requiring them to invest at least 65% of the corpus in equity but having no restriction on investing in large-, mid-, or small-cap stocks. This came after the markets regulator in September had introduced new norms for asset-allocation rules for the multi-cap funds, mandating a minimum of 25% allocation each in large-, mid-, and small-cap stocks.

Consequently, there was a readjustment of funds between the two categories, wherein a few funds remained in the multi cap category, while most moved to the flexi-cap category.

The total assets of multi-cap funds stood at Rs19,891 crore as of March end. Overall, the total assets under management (AUM) of open-end equity funds as of March end stood at Rs9,79,367 crore, a 70% gain on a year-to-year basis. However, most of the gains are likely to have come from a rebound in equity markets from their March 2020 lows as the first wave of the covid 19 pandemic hit India. The Nifty rose by around 72% in FY21.

The report said that during the fourth quarter of the financial year, the industry saw the new fund offers (NFO) of 27 open-end funds (including exchange-traded funds, or ETFs) and two closed-end funds. In total, these funds were able to garner Rs11,826 crore at their inception stage. The highest mobilization was done by ICICI Prudential Business cycle fund, which managed to receive Rs4,185 crore.

In terms of individual fund houses, Edelweiss AMC saw the highest net inflows in the fourth quarter at Rs5,251 crore, followed by Canara Robeco with Rs2,857 crore and Mirae Asset at Rs2,768 crore.

“A significant part of the total inflows in Edelweiss was on account of flows into its ETFs, which managed to garner Rs2,347 crore during the quarter," Morningstar said.

Fund houses that saw the highest net outflows were heavyweights such as HDFC, Rs32,211 crore, followed by Aditya Birla with Rs9,193 crore and ICICI Prudential with Rs8,684 crore. The large outflows seen in HDFC are primarily on account of outflows witnessed in the liquid and overnight category, cumulatively to the tune of Rs20,493 crore.

Fixed-income funds, which account for 44% of the open-end fund universe in India, witnessed outflows of Rs84,202 crore in Q4FY21. The AUM as of March end stood at Rs13,28,226 crore, down 6% when compared with the previous quarter but up by 29% compared with March last year.

Moreover, in terms of environmental, social, and governance (ESG) as a theme for investing, seven funds and one ETF were launched last year based on this theme. These funds managed to garner net inflows of Rs576 crore during the March quarter.

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