How the Big-6 mutual funds churned equities
When we look at the monthly AMFI report on mutual fund flows, the general tendency is to focus on the net flows. However, from the perspective of mutual fund churn, it is the gross flows that really matter. For instance, in the month of July 2023, the net flows into equity funds were to the tune of Rs7,626 crore. However, this entailed gross purchases of Rs38,037 crore and gross redemptions of Rs30.411 crore. The actual equity churn in the market is dependent on these gross flows as it would influence the extent to which the mutual funds churned their holdings in equities.
Now, it is not feasible to look just at the macro picture, since it does not tell us much about the action of individual fund houses. Again, there are 43 AMCs in India, and hence it is not feasible to look at the actions of each of these AMCs. Hence we restrict ourselves to just the top 6 AMCs in terms of equity AUM. The are representative as they account for more than 75% of the total equity fund AUM in India and also account for more than 75% of the equity churn. At the level of these six biggest equity AUM funds, we look at the churn at two levels. Firstly, we look at the key large cap stocks which the fund bought, sold or were neutral. At another level, we take stock of the most preferred stocks of each fund house from the point of view of alpha generation.
Portfolio churn July 2023 - SBI mutual fund
Here is a look at the major churn action of SBI Mutual Fund during the month of July 2023.
- SBI Mutual Fund added aggressively to its positions in HDFC Bank, but hat was more due to allotment of shares against its HDFC Ltd shares, post-merger. Apart from HDFC Bank, SBI MF also added to its position in Infosys, Bajaj Finance, and Reliance Industries.
- What are the stocks that SBI MF was neutral or negative on. SBI Mutual Fund was neutral on SBI, Larsen & Toubro and Kotak Mahindra Bank. It pared its stakes in ICICI Bank, ITC, and Bharti Airtel during July 2023.
- What were the top picks of SBI Mutual Fund for July 2023? Top 5 picks included LTI Mindtree, Indiamart, Petronet LNG, Shriram Finance, and Max Financial. That is a lot of alpha picks for SBI MF.
Portfolio churn July 2023 - ICICI Prudential MF
Here is the major churn action of ICICI Prudential MF during the month of July 2023.
- For July 2023, ICICI Prudential MF added to its positions in Infosys Ltd, Maruti Suzuki, Axis Bank, Bharti Airtel and ICICI Bank. Like SBI MF, ICICI also saw sharp accretion in HFDC Bank holdings post-merger.
- ICICI Prudential Mutual Fund was not neutral on major stock in July 2023. However, the fund did pare its stake in several companies including Reliance Industries, Sun Pharma, NTPC Ltd and Larsen & Toubro during the month of July 2023.
- For the month of July 2023, the alpha picks were Route Mobile, Intellect Design Arena (formerly Polaris), Prestige Estates, Mangalore Refineries & Petrochemicals Ltd (MRPL) and JK Cements.
Portfolio churn July 2023 - HDFC mutual fund
Here is a look at the major churn action of HDFC Mutual Fund for July 2023.
- Needless to say, the biggest addition in the month of July was HDFC Bank due to the conversion of HDFC Ltd shares post-merger. Other stocks that HDFC MF added include ICICI Bank, Infosys, NTPC Ltd, and Axis Bank.
- HDFC Mutual Fund was not neutral on any stock in July 2023. However, HDFC mutual Fund sharply cut positions in Reliance Industries and moderately trimmed positions in Larsen & Toubro, ITC, SBI, and Bharti Airtel.
- The top alpha picks of HDFC Mutual Fund in July 2023 included Eris Life Sciences, Krishna Institute of Medical Sciences (KIMS), Fortis Healthcare, ACC Ltd and Pidilite Industries. There were predominantly from the mid-cap space.
Portfolio churn July 2023 - Nippon India mutual fund
Here is a look at the major churn action of Nippon India MF during July 2023.
- Key stocks that Nippon India MF added in July 2023 included State Bank of India and Infosys Ltd; apart from NTPC Ltd. Nippon India MF also saw a sharp accretion in its HDFC Bank holdings due to the conversion of HDFC Ltd.
- Nippon India Fund opted to stay neutral on ICICI Bank Ltd in July 2023. However, the fund cut stakes in Axis Bank, Reliance Industries, Power Grid, ONGC and Coal India.
- For July 2023, the top 5 alpha picks of the fund included Amara Raja Batteries, Birlasoft, Jindal Stainless, Hero MotoCorp, and KFIN Technologies.
Portfolio churn July 2023 - UTI mutual fund
Here is a look at the stock churn by UTI Mutual Fund for the month of July 2023.
- Let us begin with portfolio additions in July 2023. UTI Mutual Fund bought TCS, apart from HDFC Ltd conversion.
- UTI stayed neutral on ICICI Bank, Infosys, ITC Ltd, Kotak Mahindra Bank and L&T during July 2023. It also cut positions in Reliance Industries, Axis Bank and Bajaj Finance Ltd.
- Finally, what were the alpha picks of UTI MF in July 2023? It added Suzlon Energy, Star Health & Allied Insurance, Jindal Steel & Power, Greenpanel Industries, and Indian Bank.
Portfolio churn July 2023 – Aditya Birla sun life MF
Here is a look at the major churn action of ABSL Mutual Fund during July 2023.
- For July 2023, ABSL MF added HDFC Bank (conversion of HDFC Ltd shares), State Bank of India, Bajaj Finance and ICICI Bank.
- ABSL Mutual Fund stayed neutral on Bharti Airtel and Sun Pharma in July 2023. The fund cut its positions in Axis Bank and Infosys aggressively and pared Reliance Industries and L&T moderately in July 2023.
- Alpha picks for July 2023 for Aditya Birla SL MF included small sized stocks like Utkarsh Small Finance Bank, SAIL, Star Health, Ujjivan Financial Services and BHEL.
The broad theme in July 2023 was to exit the high performing stocks and use corrections to pick stocks with a wider margin of safety.