HDFC, Nippon India and Invesco lead mid-cap inflows in August: What did they buy and sell?

The latest market report highlights that Mid-cap mutual funds continued to attract investor money in August, receiving nearly Rs 7,000 crore in net inflows during the month. But where did the money go?

Among individual schemes, HDFC Mid Cap Fund received the highest estimated net inflow at Rs 1,418 crore, followed by Nippon India Expansion Mid Cap Fund at Rs 884 crore and Invesco India Midcap Fund at Rs 831 crore.

A look inside the three portfolios reveals quite different approaches to the same category. HDFC held 79 stocks and had more than 7 percent outside its equity market-cap buckets, Nippon spread its portfolio across 101 stocks with a sizeable large-cap allocation, while Invesco ran a much tighter 41-stock portfolio with almost half its portfolio concentrated in its top 10 holdings.

Here is how the three funds were positioned at the end of August.

HDFC Mid Cap: Rs 1.08 lakh crore portfolio, 7 percent in cash

Managed by Chirag Setalvad, HDFC Mid Cap Fund received an estimated Rs 1,418 crore in net inflows during August, the highest among mid-cap schemes.

Its assets under management increased from Rs 1.05 lakh crore in July to Rs 1.08 lakh crore in August.

The fund held 79 stocks, with its top 10 holdings accounting for 32.29 percent of the portfolio. That was broadly around the category average concentration of 35.62 percent.

At the end of August, 65.42 percent of the portfolio was invested in mid-cap stocks. Another 17.04 percent was in small caps and 10.47 percent in large caps.

One number that stands out is the fund's cash and cash-equivalent position at 7.07 percent, more than twice the category average of 3.39 percent and the highest among the three funds.

Its turnover ratio was additionally low at 2.7 percent, compared with 12 percent for Nippon and 31 percent for Invesco.

HDFC Mid Cap returned 7.08 percent over one year and 16.17 percent over three years. Its one-month return in August was 1.68 percent.

Nippon India Expansion Mid Cap: 101 stocks and a 21 percent large-cap allocation

Rupesh Patel-managed Nippon India Expansion Mid Cap Fund received an estimated Rs 884 crore during August, taking its AUM from Rs 50,751 crore to Rs 52,271 crore.

It was the most diversified of the three by number of holdings, with 101 stocks. Its top 10 accounted for only 24.86 percent of the portfolio, well below the category average of 35.62 percent.

While 66.24 percent of the fund was invested in mid caps, it additionally had 20.98 percent in large caps, considerably elevated than the category average of 15.51 percent. Small caps accounted for another 11.49 percent.

The fund had only 1.22 percent in cash and cash equivalents, the lowest among the three, while its turnover ratio stood at 12 percent.

Portfolio activity was limited in August. HDFC Bank was the only new addition, accounting for just 0.34 percent of the portfolio at the end of the month. Given the small weight, it remained a relatively minor new position.

The fund returned 7.61 percent over one year and 16.79 percent over three years. It advanced 1.25 percent during August.

Invesco India Midcap: Just 41 stocks, with nearly half the portfolio in the top 10

Invesco India Midcap Fund presents a very different portfolio.

Managed by Aditya Khemani, the fund received an estimated Rs 831 crore in August, while its AUM increased from Rs 14,721 crore to Rs 15,905 crore.

It held just 41 stocks, almost half Nippon's 101-stock portfolio. And its top 10 holdings accounted for 49.72 percent of the portfolio, substantially above the category average of 35.62 percent.

Invesco had 60.16 percent in mid caps, the lowest among the three. Small caps accounted for 18.13 percent and large caps another 15.08 percent.

The fund held 1.89 percent in cash and cash equivalents and had a turnover ratio of 31 percent, elevated than both HDFC and Nippon.

Interestingly, Invesco made no new stock additions or complete exits during August, even as the fund received more than Rs 800 crore in estimated net inflows.

It was additionally the strongest performer among the three across the periods in the dataset. Invesco returned 9.60 percent over one year and 21.90 percent over three years, compared with category averages of 8.10 percent and 18.29 percent, respectively. It advanced 2.40 percent during August.

The comparison reveals that even among the funds attracting the most money, there is no single way of running a mid-cap portfolio.

HDFC is by far the largest of the three and carries substantially more cash. Nippon spreads its money across more than 100 stocks and has a sizeable allocation to large caps. Invesco, in the meantime, runs a much more concentrated portfolio, with nearly half of its equity holdings sitting in its top 10 stocks.

And despite receiving more than Rs 800 crore in estimated inflows during August, Invesco did not add or completely exit a single stock during the month. That contrast between fresh money coming in and very little change to the underlying portfolio is probably the most interesting portfolio takeaway from August.