The Hindu Business Line : Mutual funds asset base swells

Mumbai June 2 The asset base of the mutual fund industry has swollen by Rs 57,474 crore in May 2007, a record for the last 12 months, according to the data released by the Association of Mutual Funds in India (AMFI). The industry now manages Rs 4,07,753.75 crore in assets compared to Rs 3,50,279 crore in April 2007 — an increase of over 16 per cent.

The growth in asset base has been broad based with 27 of the 30 fund houses witnessing substantial inflows in May. The assets under management (AUM) of only two fund houses - DSP Merrill Lynch Mutual Fund and Sahara Mutual Fund - have dipped marginally. AMFI has, however, not mentioned the AUM figures for Benchmark Mutual Fund.

Fund managers said the industry gained inflows from the ample liquidity in the market in the past week with call rates dipping to less than one per cent and also the high inflows in Fixed Maturity Plans (FMPs), which are essentially short duration schemes not dissimilar to bank deposits.

Liquid funds

"Banks have pumped in money in the liquid funds, as there is surplus liquidity available and the call money rates were very low giving rise to an arbitrage opportunity," said Mr A. Balasubramanian, Chief Investment Officer, Birla Sun Life Mutual Fund. Also, corporates parked money in liquid funds, he added.

Most fund houses have benefited from the launch of series of FMPs, which give better returns than fixed deposits of banks, fund managers said large amount of money has flown in these categories.

"We have collected money in our equity, liquid funds and FMPs. Institutional investors entered the liquid funds while increased retail money was seen in FMPs," said Mr R. S. Srinivas Jain, Chief Marketing Officer, SBI Mutual Fund.

Better returns

FMPs offered higher returns than liquid funds, as they are close-ended products taking benefits of the interest rates while the liquid funds would have seen drop in return as the inflows in these open-ended funds was very high in the last week, said a fund manager.

Fund houses also saw money entering growth or equity schemes, said fund managers. "The retail investor still expects the stock market to be range bound and grow at an average of 15-20 per cent for a year. Retail money is entering equity funds through systematic investment plans. However, in May the debt money collected for most fund houses would have been higher than the inflows in equity funds," said Mr Jaideep Bhattacharya, Chief Marketing Officer, UTI Mutual Fund.

Reliance Mutual Fund continued to be the one with the highest AUM for the third month running. The fund house saw Rs 10,315.45 crore, being pumped in May, a growth of 21.12 per cent. Mr Vikrant Gugnani, President, Reliance Mutual Fund, said apart from the benefit of low call rates, the fund house's overall asset base stood at Rs 59,143.48 crore on account of its strategy to acquire newer customers. "We have added 70,000 fresh customers in May and extended our footprint to 150 cities," said Mr Gugnani. Of the total fund inflows for Reliance Mutual Fund, almost half came from FMPs, while the rest from liquid and interval funds, he added.

High assets

ICICI Prudential Mutual Fund followed Reliance MF for high assets at Rs 50,703 crore, an increase of 19.96 per cent. This was followed by UTI Mutual Fund at Rs 40,070.17 crore, HDFC Mutual Fund at Rs 36,146.37 crore and Franklin Templeton Mutual Fund at Rs 26,276.36 crore.

Principal Mutual Fund and Sundaram BNP Paribas Mutual Fund crossed the Rs 10,000 crore fund size with total assets at Rs 13,148.51 crore and Rs 10,145.29 crore, respectively.

In the past one year from May 2006 up till this month, the highest inflows in the industry stood at Rs 31,581.46 crore in November, a rise of 10.27 per cent.

More Stories on : Mutual Funds | Mutual Funds

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Rains may reach Mumbai, North-East by June 10

Mutual funds asset base swells

Centre bets on energy saving building code

Mahindra Renault's Logan sales at 2,786 in May

Expatriates adding to realty demand: Study

TNPL undertakes Rs 680-cr capacity expansion

Russia's VTB Bank plans corporate branch in India

RBI for flexible home loan repayment norms