Figures released by the Association of Mutual Funds of India (AMFI), reveal that assets of private sector mutual funds in August 1999 have appreciated by 20% over July 1999. At Rs 57.6 bn, cumulative assets under management for the period April-August 1999, have climbed by 83% over the corresponding period last year.

Private sector mutual funds (MFs) have posted increasing inflows mainly on account of higher returns and greater transparency. In this regard, they have also got some help from the Unit Trust of India (UTI), India's largest mutual fund. Investors have been exiting from UTI's schemes in favour of its private sector peers This is responsible for UTI's assets base eroding by Rs 4.5 bn in August 1999. Currently, UTI's assets stand at Rs 601 bn.

Of the total mop up of Rs 130 bn in April-August 1999, UTI accounted for 51% (Rs 66.3 bn), with private MFs accounting for 44% (Rs 57.2 bn) and the balance by public sector MFs. Of the fresh sales of Rs 33.7 bn in August 1999, private sector MFs accounted for Rs 27.8 bn, which amounts to 82%. One reason for this could be the launch of four new schemes by private funds.

As the MF sector turns more competitive, there is a keen contest between the private funds and UTI to attract higher inflows. The private funds seem to have got the right measure of the investor, by continuing to offer better products and services. Some funds have also declared maiden dividends on their schemes, which has evoked considerable investor interest. On the other hand, there is no perceptible improvement in UTI's image, as it continues to alienate investors with news of capital erosion of its flagship scheme US-64. So long as both, private funds and UTI, continue to function in this manner, the former will continue to grow gleefully, while the latter looks on remorsefully.

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