Here are the top AUM grossing NFOs of 2021 and a look at how they are faring
16-Feb-2022 •Ravi Banagere
2021 was a great year for the investment industry. Sensex returned more than 23 per cent, and dozens of companies made merry with their blockbuster IPOs. The mutual fund industry had its share of rub off with AMCs netting close to Rs 1.9 lakh crores in net inflows, fuelled by a flurry of new fund offers (more than 130!) collecting unprecedented amounts of money.
We looked at the data for the most successful NFOs of last year and found one common thread running across - in each of them, an overwhelming amount of AUM (over 95 per cent!) was contributed by the Regular plans.
This is in stark contrast to their older, existing category peers, where the scales between regular and direct plans are not so skewed for the net flows. Clearly, the success of NFOs heavily depends on the massive push from the distributors.
Here we look at some of the top-AUM grossing NFOs of 2021 and how their stories have unfolded after a dream debut.
SBI Balanced Advantage
This fund etched its name in the chronicles of the Indian fund industry by collecting the highest ever AUM in its NFO in August last year. And its dream run hasn't ended as it has continued to attract inflows like a magnet even after the NFO period. After starting with an asset size of close to Rs 15,000 crore, it has received another Rs 7,900 crore in net inflows in the last five months as per our estimates. However, with net (unhedged) equity weightage remaining in a tight range of around 40 per cent, the fund hasn't shown much dynamism in its asset allocation in this short while. The deployed equity allocation is also tilted heavily towards large caps, suggesting a conservative bias. Performance in these initial few months has been fine as it has managed to stay ahead of the benchmark and an average peer.
ICICI Prudential Flexi-cap
With equity markets and, in turn, investors' interest running high, this fund was an instant hit with an NFO collection of close to Rs 10,000 crore in July last year. But it's never easy to deploy that kind of money quickly when valuations are already trending high. More so, for a value-conscious fund house like ICICI Prudential. As a result, it took a couple of months to invest even 50 per cent of the AUM in equities, and as per the last disclosed portfolio, the equity allocation is still only 81 per cent. This caution has come at an opportunity cost as the fund trails its benchmark and peers by about 2.5-3 per cent in returns since launch. But to be fair, it's better to tread cautiously than pay the price of investing recklessly at whatever valuations. Nevertheless, with 19 per cent still lying in cash and equivalents, the fund manager would hope that the markets open some good buying opportunities soon, or the investors might start asking questions.
BHARAT Bond ETF - April 2032
Edelweiss has pioneered passive debt funds in India, and their Bharat Bond series of exchange traded funds has caught investors' fancy. Its fifth tranche, launched in December 2021, is no different. The fund comes with a maturity of around 10 years and invests in a portfolio of high-quality bonds issued by PSUs. It raised over Rs 6,000 crore at the time of its launch in December 2021. But unlike many equity ETFs, almost all its assets are contributed by the ETF variant, while the fund-of-fund (FoF) has raised only 5 per cent of the total AUM.
According to fortnightly disclosures, the fund hadn't deployed all of its cash by December 15, 2021. However, by the end of that month, it had deployed all of it with an average portfolio yield of 6.99 per cent, which is higher than the indicative yield of 6.87 per cent provided by the AMC during the NFO period.
NJ Balanced Advantage
Despite the AMC being the newest on the block, its debut fund made an impressive start netting around Rs 5,000 crore. It was a remarkable feat, thanks to the well-entrenched distribution network of its parent NJ Group. The post-launch inflows, however, have been pretty muted. The fund has allocated about 52 per cent in equity, out of which allocation in mid and small-caps is more than 34 per cent, making it one of the more aggressively managed ones in the context of market cap exposures.
Axis Multi Cap and HDFC Multi Cap
The category of multi-cap funds resulted from a regulatory mishap in late 2019. Nevertheless, fund companies have grabbed the opportunity to launch another fund with both hands. Two AMCs, Axis and HDFC, have been the prime beneficiaries. Both launched their multi-cap funds in December 2021 and rank among the biggest five multi-cap funds, thanks to their uber-successful NFOs. But that's where their similarities end.
Axis is building up positions gradually, with only 57 per cent of AUM invested across 43 stock markets by the end of January. HDFC, on the other hand, is almost fully deployed in a seemingly over-diversified portfolio of 106 stocks. Notably, Gopal Agarwal is also running his Large and Mid-Cap Fund in a similar fashion with a portfolio spread across 135 stocks.
Their choice of stocks pretty much reflects the investment philosophies of the two AMCs, with Axis' growth-oriented portfolio valued much more richly at a P/E of 35 (the highest among its peers) while that of HDFC at just 21.
ICICI Prudential Business Cycle
'Business cycles' theme has caught the fancy of asset managers, with four of them launched last year. But the one from ICICI Prudential was most successful in attracting AUM. Notably, the investor interest hasn't died down post the NFO as there have been inflows to the tune of Rs 700 crore in the subsequent months per our estimates. It has been over a year since its launch, but the cash component in the portfolio has remained above 15 per cent. Despite this, the direct plan has managed to beat the benchmark in a rising market, which is impressive. Going by its theme, the fund is currently betting big on financial services, energy and construction sectors.