Mutual Funds (MFs) have reported higher inflows in their equity-oriented funds as stock markets continue to post significant gains, notwithstanding the Lok Sabha elections. This was reported by a leading financial newspaper.

Equity funds seem to be carrying on from where they left off in August. In September, funds like SBI MF collected Rs 70 m for their equity schemes (Rs 55 m in August 1999), IL&FS MF garnered Rs 530 m, DSP Merrill Lynch received Rs 682.7 (Rs 241.7 m) while ING Savings Trust collected Rs 180 m (Rs 70 m).

The interest in equities is sustained by impressive performance of software and media stocks, with economy-related stocks (like cement and housing) also posting handsome gains. However, two initial public offering (IPOs) - Hughes Software and Polaris Software aggregating over Rs 80 bn have stolen some thunder from the big MFs like Birla Sun Life, Prudential-ICICI and SBI MF. These MFs would have posted higher inflows had it not been for these IPOs, which diverted investors' monies away from MFs.

As was expected, the increased interest in equity schemes has seen a waning inclination towards debt schemes. Income schemes' returns have not been able to keep pace with equity schemes returns, and the gap between the two is increasing rapidly. Conservative debt scheme investors who earlier were guarded in their investment approach, are now turning to equity schemes in a big way. This has improved equity scheme inflows at the expense of debt schemes.

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