Despite the gloom in the markets over since March, the mutual fund industry has actually witnessed a surge in (net) inflows of Rs 12.4 bn.

We have been reading about how the sell-off in the markets has made the most resolute of investors turn panicky. Fund managers have been confronted with hordes of investors who can't wait to get off the mutual fund bus. The redemption pressure on fund managers in turn has seen more selling, adding to the negative sentiment. So that's bad news for the mutual fund industry, right? Wrong!

Latest inflow figures (for March 2000) show that the Indian mutual fund industry is made of stronger stuff than that. Despite the nervousness in the markets, more investors actually entered mutual funds. And even more surprising is the fact that growth funds (notwithstanding the volatility in equity markets) actually witnessed inflows of Rs 26.0 bn in March, and income funds posted outflows of Rs 15.7 bn.

But all this talk of maturity could come to naught if the surge in inflows has been triggered by dividends announced by mutual funds in March. Dividend-stripping inflows are fickle and turn into outflows after investors collect their dividends. So has the mutual fund industry really turned mature? Look out for the April 2000 figures!

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