Investors have put in more than Rs1.5 lakh crore in various mutual funds in the first five months of the current fiscal,as against cumulative net outflow of over Rs 70,000 crore in the previous two financial years.
A revival in the stock market and various reform measures being undertaken by the government and regulator Sebi may help the mutual fund industry mobilise further funds in the coming months,say experts.
As per the latest data available with Sebi,there was a net inflow of Rs 1,53,781 crore between April and August 2012 as against total fund mobilisation of Rs 1.24 lakh crore in the corresponding period of last fiscal 2011-12.
However,there was a net outflow of over Rs 20,000 in the entire 2011-12,while a net amount of nearly Rs 50,000 crore moved out of the mutual funds’ kitty during the previous fiscal 2010-11.
Prior to that,mutual funds had mobilised Rs 83,000 crore in 2009-10,Sebi data shows.
At gross level,the mutual funds mobilised a total amount of over Rs 30.4 lakh crore in the first five months of the current fiscal,while there were redemption worth Rs 28.9 lakh crore as well — resulting into net inflow of about Rs 1.54 lakh crore.
This significant level of fund mobilisation has also helped the total asset under management of mutual funds to grow to Rs 7.5 lakh crore as on August 31,2012.
Mutual funds pool together money from many investors and invest it on behalf of the group,in accordance with a stated set of objectives.
Market analysts expect the trend to pick up in the coming weeks,as the government and Sebi have expressed their intention to revive equity culture in the country and help channelise the household income into stocks,mutual funds and insurance sectors,rather than in idle assets like gold.
After gaining one per cent in August,strong FII inflows had pushed up the BSE’s benchmark Sensex by 1,382 points or eight per cent last month.
“The current market conditions and wide-ranging reforms announced by Sebi to re-energise the mutual funds industry would help the sector to channelise funds in the equity market,” Sudip Bandhopadhyay MD and CEO at Destimoney Securities said.
He also said the stock market and mutual funds stand to attract more investments from the Rajiv Gandhi Equity Savings Scheme,but it could be initially complicated for first-time investors.
Another analyst Wellindia President (Research) Vivek Negi said,” a number of steps taken by the Sebi for the benefit of mutual fund industry and revival in the stock market on the back of various economic reforms measures undertaken by the government are expected to help the mutual fund industry to invest in the equity market.”
However,investment by mutual funds in equity schemes continued to decline for the second consecutive month,although at a slower pace.
The mutual funds withdrew Rs 1,631 crore in August as compared to a withdrawal of Rs 1,988 crore in July. However,mutual funds were bullish on the debt market and poured in Rs 28,863 crore in August as against Rs 2,985 crore poured in the preceding month.
As part of its reform measures,Sebi has made investments in the mutual funds schemes a simpler and safer.
Besides,fund houses would have to make more disclosures in the interest of investors. They also have to shift to the one plan per scheme model,moving away from the present practice of cluttering one scheme with numerous plans.
At the same time,fund houses will be able to charge their investors a little bit more as incentive for expanding to small cities,but would also have to set aside a small portion of their assets for investor education and awareness.
During August 2012 itself,mutual funds mobilised Rs 19,806 crore (of which Rs 16,725 crore were mobilised by private sector mutual funds and Rs 3,080 crore by public sector mutual funds). This compares to Rs 38,457 crore mobilised (of which Rs 27,500 crore was mobilised by private sector mutual funds and Rs 10,957 crore by public sector mutual funds) during July 2012.