The latest monthly update (January 2001) from the Association of Mutual Funds in India (AMFI) once again confirms a trend that first emerged several months ago  increasing share of private funds in the domestic mutual fund scene.

Private funds are confidently gaining market share largely due to improved customer service and innovative products. This of course has proved to be detrimental to the Unit Trust of India's (UTI) interests. Private funds have enhanced market share to just below 30% in January 2001 from about 23% in January 2000. In 12 months, their market share has appreciated by approximately 7%.

On the other hand, UTI's fortunes have gone the other way. From January 2000 (66.1% market share), UTI has seen market share fall to 63.4%. Not the entire fall can be attributed to private funds stealing UTI's share. The mutual fund pie has actually increased. That is mainly why UTI has witnessed a decline in market share year on year despite seeing an increase in net assets to Rs 10,454 m in January 2001 (Rs 10,157 m in January 2000).

Over the past few months we have seen private funds releasing a plethora of new products targeting a range of investors. Initially we had a slew of monthly income plans (MIPs) targeting the retired class of investors, now we have seen a few children plans. In the same period, UTI hasn't had much to offer except for its staple MIP launches. Another reason UTI hasn't played a very active role in the initial public offer (IPO) market is because it already has a complete product range. However, UTI is feeling the heat of competing on too many fronts with over 30 players in the industry.

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