Money magnets of 2021

Goodbye 2021 and welcome 2022. In 2021, we saw the Sensex return more than 23 per cent; dozens of companies got listed on the Indian exchanges; a few new AMCs jumped on the mutual fund bandwagon and a few got merged with/acquired by others. This was also the year when about 88 open-end equity funds were launched, attracting close to Rs 50,000 crore, the highest-ever till date over the last two decades.

We wanted to find out which funds attracted the highest sums in 2021. There is no simple way to identify inflows/outflows from any fund as there are no direct disclosures available. So, we estimated them based on the daily AUM and NAV disclosures. In our study, we considered only open-end equity funds (excluding the funds launched in 2021, which have been covered as a separate set). Also, there were about 28 funds for which the daily AUM data was not available.

So, here we present to you the list of money magnets of 2021.

Top winners and losers
If we look at the top 10 money magnets in the entire open-end equity category, three ETFs have found a place in this list. All of these are the beneficiaries of the massive investments by the Employees' Provident Fund Organisation (EPFO). We do not have the official figures of the EPFO's investments for 2021 yet, but if we see its buy transactions in these ETFs in FY-21, that number was about Rs 32,000 crore. This suggests that an overwhelming portion of the inflows in these three ETFs comes from the EPFO alone.

Next, we see that PPFAS Mutual Fund, which barely makes it to the top 20 list of AMCs in terms of open-end equity-fund AUM, has punched above its weight by grossing the highest net flow in its Parag Parikh Flexi Cap Fund in 2021. This has come after the fund's outlier performance in recent years. But it is also a testament to the diverse investment mandate that the fund offers, the AMC's focused list of offerings, and its competent management.

Next on this list is Axis Bluechip Fund in the large-cap space. Its presence is quite notable as many of its peers are finding it difficult to keep up with their passive counterparts. Another important observation from this list is the presence of one sectoral fund investing in the technology sector, which delivered the highest returns among its sectoral/thematic peers last year.

In the bottom 10 list, we have four funds each of actively managed flexi-cap and large-cap categories. Active large-cap funds are bearing the brunt of the rising popularity of index funds in the blue-chip segment. Interestingly, nine out of these 10 funds feature in our Big 50 funds list, which comprises the top 50 open-end equity-oriented funds by AUM. The only exception is Franklin India Focused Equity Fund, which also used to be a part of this list until the start of 2021.

Other observations

• We estimate that active equity funds managed to rake in 27 per cent more AUM than all of the passive equity funds. This is after considering all the NFOs launched in 2021 (almost half of them were for passive funds) and a disproportionately huge portion of this money has been from EPFO.



• If we took out the EPFO money from the total net inflows, then SBI Mutual Fund would still be among the top five AMCs by net flows. However, UTI Mutual Fund would probably have to make way for Kotak Mahindra Mutual Fund, which has net flows of Rs 13,000 crore.



• Motilal Oswal NASDAQ 100 ETF had a net flow of about Rs 2,500 crore and should have ideally made it to the top five international funds. However, about 80 per cent of the money in this ETF has come indirectly through its fund-of-fund (FoF) variant and hence the latter makes it to the list.



• In a year when there was a lot of noise about the value theme making a grand comeback, which is justified from the higher returns delivered by value funds than those of their flexi-cap counterparts, we saw Rs 4,689 crore go out from value-oriented funds. We see a reflection of this in the top five in this category of about 22 funds, wherein the fifth fund barely has any net flows.
• Among sectoral/thematic funds, technology and banking funds have taken up all the spots in an assorted category of more than 200 funds that we classify into 12 categories based on their investment objective. On the contrary, infrastructure and MNC funds generated least interest as per our estimates and both witnessed net outflows in 2021.
• Among the newly launched open-end equity funds in 2021, we do not find a single passive fund among the top five. So, while quite a few of them were launched this year, big money still went to the actively managed ones.
• Kotak and Axis are two AMCs whose funds appear at the top of most of the lists in this story.