Mutual fund mobilisations vault to Rs 299 bn
Dec 10, 1999

Author: PersonalFN Content & Research Team

As reported by the Securities and Exchange Board of India (SEBI), domestic mutual funds (MFs) have mobilised Rs 298.6 bn in the first nine months of the current fiscal year.

Robust growth in mobilisations of Rs 298.6 bn in the current year assumes even more significance given the fact that the industry could register mobilisations of only Rs 227.1 bn in the whole of FY99! SEBI's report revealed that FY2000 witnessed net inflows of Rs 113.5 bn compared to net outflow of Rs 9.5 bn in FY99. This implies that there were inflows in MFs this year, as compared to last year when there was an exodus.

In the first nine months of the current fiscal, private sector MFs witnessed net inflow of Rs 78.2 bn, while public sector funds posted net outflow of Rs 6.0 bn. UTI registered net inflow of Rs 39.2 bn in this period.

Cumulative net assets of the MF segment has breached the Rs 900 bn-mark to touch Rs 906.9 bn. UTI with assets of Rs 646.4 bn, now accounts for 71% of the industry, while the private sector (Rs 170.4 bn) accounts for 19% of total assets. Public sector funds (mostly funds of nationalised banks) account for a mere 10% (Rs 900 bn) of the MF industry.

SEBI explained that the difference between its figures and those released by the Association of Mutual Funds of India (AMFI) was due to the fact while SEBI mentions only the domestic figures of MFs, AMFI reports the mobilisations figures inclusive of the offshore funds of UTI and its venture capital schemes.

Improved MF mobilisations in FY2000 can be attributed to the dramatic turnaround in the performance of stock markets after a prolonged lull for most of last year. But what actually set the ball rolling were the tax sops offered to MF investors in the FY2000 Union Budget. This combined with the robust performance of software, pharma and FMCG companies lured the equity investors back to MFs, as the latter began investing big time in these stocks. MFs also began offering innovative products like sectoral and balanced schemes to address the needs of a variety of investors. As expected, investors who had been ignoring MFs for a long time, came back in large numbers.