AMFI August Data: NFOs Steal The Show
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00:00I'm joined right now by Ashish Somai. I was the Chief Executive Officer of White Oak Capital.
00:05Ashish, thanks so much for taking the time and more of the same I think is what we're seeing
00:10in the month of August and considerable inflows once again into sectoral and thematic funds.
00:16Are you at all concerned with the kind of money that is going into these schemes?
00:21Yeah, Alex, I mean, you know, if you look at it in net flow terms, you know, I heard you
00:29mentioned about new fund launches. And, you know, if you look, you know, further,
00:34so like you rightly said, new fund launches, mostly thematic funds, well over 10,000 crores,
00:41right? That is one data to look at. And if you look beyond just new fund offers, and you look
00:47at the business as usual, you know, the total flows. So, what you will find if you look at
00:52the total flows is that, you know, in equity-oriented funds, like you said, some 38,000
00:58crores of net flow. Out of that, nearly half of it is thematic funds. You know, so I think
01:06that's kind of, you know, not a great thing to really have, if you ask me.
01:11Because when you look at the thematic funds which are launched, and the thematic funds
01:16which seem to have collected money, right? So, you will find stuff like, you know, macro-driven.
01:22See, when somebody launches a business cycle fund, those kinds of funds are launched when
01:27they find that stock picking or bottom-up doesn't seem to work, and macro themes seem to be working,
01:35right? So, you've seen a lot of this manufacturing, defense, energy, and then you've seen
01:40business cycle, which is also top-down macro-driven, because last two years, that's how the
01:45macro is determined with sectors and which market caps will work. But what happens is that a lot of
01:50that is rear-view mirror driving, right? And a lot of that money is going into sectors and stocks,
01:57which have already done their bit, whereas the reality is that in the last three to six months,
02:01the best-performing sector by a mile is probably pharma and healthcare, right? And I don't think
02:07you are seeing any such thematic funds being discussed out there. So, yeah, I mean,
02:12the numbers are great, but the, you know, under the hood, the trend or where the money is going
02:18from a long-term perspective, not that great. Yeah, and which is concerning. And hopefully,
02:24more people are listening to what you're saying when they're making the choices and, you know,
02:28take that into account when they make the choices that they are making. What do you make of the
02:32inflows into large-cap funds? It seems quite interesting, right? Because evidently, there is
02:38the smart money that is now rotating out of the broader markets and into the large-cap because
02:43they're a little risk-averse. Rs. 2637 crore into actively managed large-caps. I haven't looked at
02:51many months of data, but I would hazard a guess to say that this is one of the highest that we've
02:55seen in quite a while. It's better than before. It's better than before. But, you know, again,
03:00when you put it in light with what is happening with thematic funds and, you know, the fact is
03:04that on a, you know, if you were to look at it, forget just net flow, even on a gross flow basis,
03:10you know, because generally what happens is that when you look at net flow, it hides a lot of
03:14things. You should ideally see the gross flow and the outflow. So what you will find is that
03:18on a gross inflow basis, small-cap and mid-cap got more than large-cap. And on an outflow basis,
03:26small-cap lost less than large-cap. So what you're finding is that on a net flow basis,
03:32small-cap and mid-cap and thematic, you know, if you take the pecking order, it is thematic has the
03:37highest net flow. Then, you know, it is small-cap, mid-cap and, you know, those kinds of things
03:43which stack up. And large-cap and, you know, large-cap, flexi-cap, all of that is there.
03:48But large-cap is like kind of at the bottom when you look at flows, you know, net or gross or
03:54whichever way. Yeah, that's a very important point that you're raising on the gross flow number.
04:00I'm also curious, Ashish, about what the SIP number is once again. And I'm also curious about
04:05what you have to say because we've been looking for this data from Amphi for a while about the
04:12net SIP flow data because the contention has been that the gross number, and I've been looking at
04:18it since July of 2023, Ashish, the gross number every month has been a new record. So that's
04:24great. But there have been closure of SIPs as well. I have been told in the past, look,
04:30that's par for the course. And even back when it was 13,000 crore rupees of SIP,
04:35anyway, 50% was the net number, 50% or 40%. Is that the way to look at it even now at 23,000
04:42plus crore? Yes. When you look at 23,000 crore, obviously, that's the headline number.
04:48And different fund houses will have different rate of collection. Say, for example, if there
04:55are 100 people who have done 3,000 rupees SIPs, then out of 100, certain proportion, like 60%,
05:0370% might get collected and say 20%, 30%, it might get dishonored or maybe bounces once and
05:11the next time it gets collected, etc. So really, I don't have a number at an industry level in terms
05:17of what that proportion is. The second thing is that when you look at net number, so sometimes
05:24when people say net, I think there is a confusion which I want to clarify that there is a stock and
05:31there is a flow. So in the industry, let us say if you look at equity funds and hybrid funds,
05:37the AUM is 36 lacrosse. Now, I am not counting ETF and index, just counting actively managed
05:42equity funds and this balance, balance advantage, etc. Let us say the AUM is about 36,
05:4737 lacrosse. Out of that, you will find that the SIP AUM is say maybe about 14, 15 lacrosse.
05:53Now, because the SIP AUM is 14, 15 lacrosse, whose money is it? It is investors' money. When
05:57they need the money, they will remove it, correct? So any which way the industry gets, like if you
06:02see this month, there is 90,000 crore of inflow and some 45, 50,000 crore of outflow. So the net
06:08flow totally in equity and hybrid is about 40, 40,000 crores. So when you have 40, 45,000 crore
06:13of redemption in a month, obviously some of the investors' money, I mean, it is their prerogative
06:19to withdraw when they require. So even in the SIP AUM, people who accumulated over the years,
06:24their goals are met, they need money, liquidity, market condition, many things,
06:27they might withdraw only. So when you look at net number of SIP, I think you should not be
06:32focusing too much on the net number because it is investors' money, they will withdraw.
06:36And the point is that redemption is a function of how big your AUM is, whereas inflow is a function
06:41of what people are thinking today. So I think that is the challenge. But yes, I understand
06:47your question. Your question was that how much of the 23,000 actually gets collected. I really
06:50don't have a number on that. But it is safe to say that maybe 60, 70% is collected and at any
06:56point in time, some people don't pay this month, they pay next month, these kind of things do
07:00happen. That's a fair point. Ashish, thanks so much for that insight. It's actually quite
07:04interesting before we actually get the SIP number. And I'm hopeful, fingers crossed,
07:10that there's another record to talk about. Thanks so much for joining in.
07:13It will be. Yeah.
07:14Yeah. Thanks so much for joining in. Pleasure.