Given the sharp rally in the markets along with the need to fill product gaps created post-recategorisation and give investors new themes to invest in, asset management companies launched a plethora of new schemes across the year.
According to Morningstar-Domestic Fund Flow Report 2021, the Indian mutual fund industry launched 140 new schemes from January to December 2021, collecting Rs 99,704 crore. This amount is almost double what was mobilised in 2020.
In 2020, 88 new funds were launched, which mobilised Rs 53,703 crore during the same period.
Almost all the launches were in the last two quarters, July-September and October-December. The 86 schemes (43 launches in each quarter) collected over Rs 80,000 crore.
In October 2017, the market regulator, Securities and Exchange Board of India (SEBI), came out with a circular along with a framework to categorise and rationalise mutual fund (MF) schemes. According to the framework, all MF schemes had to be broadly classified into five categories and further thirty-six subcategories. It had asked all the fund houses to align their schemes in accordance with the framework in six months.
To comply with the new framework, many schemes either saw their fundamental attributes changed or merged with other schemes or changed their names. This led to a product gap.
According to the report, asset management companies that saw the highest net inflows in 2021 were SBI MF with net flows of Rs 81,138 crore, followed by Kotak MF with Rs 32,248 crore, Axis MF with Rs 30,628 crore, ICICI Prudential MF with Rs 30,295 crore, and Edelweiss MF with Rs 29,500 crore.
The humungous net flows into SBI MF were largely on account of two funds; SBI Liquid Fund with Rs 23,900 crore and SBI Balanced Advantage Fund Rs 22,703 crore.
Among the exchange-traded funds (ETFs), SBI managed to garner the highest flows during the year with Rs 27,193 crore.
In contrast, asset management companies that had the highest exodus during 2021 were HDFC MF (Rs 23,900 crore), followed by Franklin MF (Rs 9,671 crore), and IDFC MF (Rs 9,181 crore). The highest net outflows in HDFC MF were from HDFC Liquid Fund (Rs 17,111 crore) in 2021--a category that typically has large institutional money.
The balanced advantage/dynamic asset allocation segment by itself had net inflows of Rs21,106 crore during the third quarter.
Generally, in the past, net inflows or outflows in the arbitrage category would usually be determined by whether the net flows in the allocation/hybrid funds is positive or negative. However, this year (2021), given the rally in the equity markets, the net inflows in the arbitrage category have been relatively muted, while the balanced advantage/dynamic asset category has had extremely strong flows not just in this quarter but all through 2021. The allocation/hybrid category received net inflows of Rs 1,02,459 crore in 2021. This was after net outflows of Rs 53,196 crore in 2020. The assets of the allocation/hybrid category as of December 2021 totalled to Rs 4,70,522 crore, up by 5 per cent since the last quarter and 48 per cent compared with December 2020.
