How mutual funds churned in March 2023

An action month for mutual fund churn

March 2023 is normally a month when the major mutual funds churn quite aggressively. They not only tend to get out of weaker names but also consolidate their position in the stronger names. It is also the time when the broad investment strategy of the fund for the coming year is starting to be implemented. One of the ways to understand the churn is to focus on what the big fund houses have been doing in the month. Obviously, here the focus is on equity churn and so the focus will be on the largest funds by equity AUM and not by overall AUM. Here we look at 6 of the major fund houses in India and their equity churn action in the month of March 2023.

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SBI mutual fund adds Kotak Bank, reduces SBI

SBI Mutual Fund is not just the largest AMC by overall AUM but also by equity AUM by a huge margin. Hence its actions assume a lot of significance. In the month of March 2023, SBI Mutual Fund added more of Kotak Mahindra Bank, Infosys, Bharti Airtel, and Larsen & Toubro to its equity portfolios; while remaining neutral on HDFC Bank and ICICI Bank. SBI MF also reduced its holdings in SBI, Reliance and ITC. To boost its alpha prospects, SBI also picked up some mid-sized stocks like HFDC AMC, BHEL, Biocon, REC and Mphasis during the month of March 2023.

ICICI Prudential mutual fund adds Infosys, cuts HDFC Bank

In the last two years, ICICI Prudential Mutual Fund has emerged as the second largest AMC in India in terms of total AUM and equity AUM. For the month of March 2023, the fund house added to its positions in Infosys, Reliance, and Bharti Airtel, but chose to remain neutral on Axis Bank and ONGC Ltd. During the month of March 2023, ICICI Prudential Mutual Fund was also busy cutting positions in some stocks. It reduced exposure to HDFC Bank and Sun Pharma. However, alpha hunting has been going on aggressively as the fund house added Gillette India, Atul, Dalmia Bharat and Page to equity holdings in March 2023.

HDFC mutual fund adds Infosys but reduces SBI

HDFC Mutual Fund may have ceded the top 2 positions to SBI MF and ICICI Prudential MF, but it still remains a forceful and strong influence in the markets. Hence, the actions of HDFC MF are still closely tracked in the markets. For the month of March 2023, HDFC Mutual Fund added to its positions in Infosys, Reliance, Axis Bank and HDFC Bank; while remaining neutral on ICICI Bank, ITC and NTPC. HDFC MF also opted to cut positions in large caps like SBI and Larsen & Toubro. For the month of March 2023, the major alpha picks of HDFC Mutual Fund included Dixon Technologies, Sona BLW and Biocon in the mid-cap space.

Nippon India mutual fund adds Coal India, cuts HDFC Bank

Nippon India MF (formerly Reliance Mutual Fund) was once the largest fund by AUM but later lost its mojo along the way. With Nippon taking them over, it has grown rapidly and become an influential name in markets. In March 2023, the fund added large cap stocks like Infosys while heavily cutting its positions in stocks like HDFC Bank, NTPC, Power Grid, ONGC, ICICI Bank, Axis Bank and SBI. Nippon India MF was using higher levels to book profits in the market and shift to cash holdings. However, it also picked some very select mid-sized stocks in search of alpha. These stocks included Kirloskar Oil Engines, HDFC AMC, JK Lakshmi Cement and Jubilant Foodworks.

UTI Mutual Fund buys into HDFC but reduces Reliance Industries

UTI has been the pioneer in the mutual funds space in India and has recently made a serious effort to boost its AUM; and recover its leadership position. For the month of March 2023, UTI Mutual Fund bought more shares of HDFC Ltd and Kotak Mahindra Bank Ltd, while remaining neutral on ICICI Bank, HDFC Bank, TCS and ITC. It has also trimmed down its positions in stocks like Reliance Industries, Infosys, Axis Bank and Bharti Airtel in the month. UTI was also active in alpha hunting in the mid-sized stocks buying up stocks like NMDC, Canara Bank, Varun Beverages and Emami during the month of March 2023.

Aditya Birla Sun Life MF adds Sun Pharma, cuts ICICI Bank

While Aditya Birla MF still continues to predominantly be a debt-oriented fund, it has the sixth largest equity franchise among mutual funds in India. For the month of March 2023, the fund house added large-cap shares of Sun Pharma, Reliance Industries, Larsen & Toubro, HDFC, Bharti Airtel, SBI and Infosys. Aditya Birla MF has been using the volatility to nibble at its preferred stocks, even as it remained neutral on HDFC Bank and Axis Bank in the month. The fund house also reduced positions on one stock; ICICI Bank, which has rallied sharply in the last one year. However, Birla AMC also continues to be very active in picking up smaller stocks for alpha. In March 2023, the fund house picked up Devyani International, Home First Finance, Phoenix Mills and HAL in its alpha hunt.

To sum up, the big fund houses have been using the volatility in March 2023 to churn their portfolio smartly. The more important trend has been in the mid-sized picks in its search for alpha. 

Source: MF Filings