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Thursday, Apr 12, 2007
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Business Daily from THE HINDU group of publications Thursday, Apr 12, 2007 ePaper |
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Stock Markets Markets - Mutual Funds Nilanjan Dey
Kolkata April 11 Equity-linked savings schemes and index funds have emerged among the top gainers in terms of addition to assets during the year ended March 31, 2007, lending further credence to the theory that Indian investors are finally getting fired up about two very critical tenets of savings and investments - tax-planning and indexing.
The raw stats
Open-ended tax-planning funds ended the fiscal with Rs 11,713 crore under management, up from Rs 9,214 crore that these managed collectively at the end of March 2006. Open-ended index funds also added significantly to their assets during this period, moving from Rs 176 crore at the close of 2005-06 to end 2006-07 with Rs 559 crore. The growth recorded by the ELSS category may be seen in the context of developments taking place recently on the taxation front, say fund circles, while referring to Section 80C of the Income-Tax Act, which allows tax savings (subject to a lock-in of three years). The rise in assets managed by index funds is attributed to greater responsiveness to the passively managed products that seek to mirror certain indices without attempting to outperform them in any manner. An assessment of March-end figures for 2006 and 2007, done by Plexus Management, indicates that several categories have grown markedly between the two relevant dates. In a few stray cases - banking funds and diversified funds with international exposure - the growth is quite conspicuous. `Open-ended global diversified equity', as the latter category has been branded, has for instance moved up from Rs 13 crore to Rs 441 crore. Such growth figures notwithstanding, the distribution firm intends to put in a word of caution. "There is no reason to wallow in the premise that equity assets have swelled across categories. They have not actually. Certain categories, however, have evolved remarkably," said Mr Prasunjit Mukherjee, who heads Plexus. The reference is to those that have failed to record any serious improvement - and to those that have in fact declined. Close-ended mid-cap equity, for instance, has registered a modest growth, from Rs 1,427 crore in March 2006 to Rs 1,482 crore in March this year. This stands in contrast to open-ended mid-cap equity, which has critically piled up assets, from Rs 8,859 crore to Rs 12,060 crore. At another level, open-ended infrastructure equity has crept up from Rs 3,462 crore to Rs 5,839 crore.
Sector funds Scenario
Assets managed by sector funds present a mish-mash of numbers, with some of them evidently maturing and others losing ground over the one-year period, the review has suggested. Open-ended banking funds come out tops in this regard - from Rs 779 crore to Rs 3,473 crore. These are followed by technology funds, which moved up from Rs 678 crore to Rs 831 crore. Auto funds too gained ground, moving up from 57 crore to Rs 79 crore. FMCG and petro funds have both declined. The former has scaled down from Rs 182 crore to Rs 124 crore, while the latter has ended March 2007 with Rs 174 crore after closing March 2006 with Rs 231 crore.
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