With the slump in equity markets persisting, net assets under management of the mutual fund industry has improved only marginally. As per the latest data (31st May 2001) of the Association of Mutual Funds in India (AMFI), total assets under management rose by a mere 7% to Rs 968 bn from Rs 906 bn in the month of March 2001.

Unit Trust of India (UTI) the so-called Big Daddy of the Indian mutual fund industry is facing some stiff competition from the private players. UTI had 64% market share in the month of March 2001, but finds its share hovering around 58% in May 2001. The fund saw total redemptions of Rs. 23 bn, with fresh sales of just Rs. 4 bn (i.e. net outflow of Rs. 19 bn). UTI's assets under management have slumped to Rs 577 bn in May 2001 from Rs 580 bn in the month of March 2001.

Unlike UTI, private funds have been in the limelight lately. Share of private mutual funds in the domestic mutual fund industry has shot up to 34% in May 2001 from 28% in March 2001. There was a net inflow of Rs. 28 bn in private funds (total redemptions of Rs. 40 bn and the total sales were Rs. 68 bn). Total assets under management of private fund has improved to Rs. 318 bn from Rs. 257 bn in the month of March 2001.

With equity funds in the doldrums, income funds have become the preferred choice for most investors. In this regard, private funds with a large array of income offerings and a stable investment strategy have stolen the thunder from UTI, which has had to face some flak for its sub-standard investments in equity and debt markets. UTI has some work to do if it wants to recoup the Trust factor, which was its Ace for more than three decades.

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