The Hindu Business Line : Equity funds' asset base swells

ASSETS managed by equity funds are swelling, thanks to investors who are pumping in money with scant regard for the wild fluctuations being recorded by the indices .

Sizes of some of the largest schemes have increased in September, distinctly up from the previous month. The likes of Fidelity Equity, Franklin India Flexicap and Franklin India Prima are all larger than before, a trend that is being attributed to the market's growing willingness to allocate more resources to equity funds.

A major chunk of the incremental inflows is on account of small investors, claim sources in the asset management industry, adding that distributors in the relatively lesser known centres have started playing an important role on this front.

For the record, Fidelity Equity has ended the past month with Rs 2,543 crore, compared with Rs 2,272 crore at the end of August. The latest figure (as compiled by AMFI) can be broken up into assets under dividend and growth options - Rs 1,771 crore and Rs 772 crore respectively. In comparison, the end-August numbers were Rs 1,606 crore and Rs 666 crore in that order.

The trend has clearly thrilled those in charge of business development at various fund houses.

Mr Saurabh Sonthalia of DSP Merrill Lynch MF felt investors are taking to equity funds in a big way, driven as they are by a combination of several factors. "The stock market has proved many calculations wrong. The liking for equity funds is a spin-off," he notes even as he refers to such well-known issues like the decline of fixed-income options and the growing faith in equity among ordinary investors.

Franklin Templeton, which manages some of the largest funds, has seen an increase in assets held by Flexicap and Bluechip, both large schemes. Their end-September numbers are Rs 2,078 crore and Rs 1,770 crore - up from Rs 2,001 crore, and Rs 1,687 crore (as at end-August).

According to Mr Sandip Singh of Franklin Templeton, equity funds should gain in terms of assets, given investors' greater inclination to bring in fresh money at regular intervals and stay put for longer periods. "This trend is more evident than ever," he observed.

As things stand, some of the other leaders in the pack are the 15-year close-ended Morgan Stanley Growth Fund and the newly launched SBI Magnum MultiCap. Both have over Rs 2,000 crore with them; the latter, in fact, represents the largest-ever collection by an NFO.

Distributors point out that a handful of jumbo-sized funds account for a very crucial portion of the total assets commanded by the entire set of equity schemes.

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