Mutual fund asset base shrinks by 8 pc

Meanwhile, mutual funds mobilisation stood at Rs 61,241.23 crore during the financial year 1999-2000 as against Rs 22,710.73 crore mobilised during the previous year 1998-1999. According to the Securities and Exchange Board of India (Sebi), after adjustment of repurchases and redemptions, there was an inflow of funds of Rs 18,969.88 crore in the last fiscal as against a net outflow of Rs 949.67 crore in the previous year.

The potential for MF industry in India has rapidly grown with 32 asset management companies (AMCs) operating 312 schemes. “MF collections had gone up last year in response to the tax breaks given to the sector in the general budget and the hope that the tax incentives would not be withdrawn in the next budget,” said a Sebi official.

“The mutual fund as a capital market intermediary emerged as new avenue for capital resources last year. It still bridges the gap between retail investors and capital markets. Fund mobilisation will pick up in the coming months,” said a fund manager. UTI accounts for nearly 67 per cent — or Rs 69,882 crore — of the total investible funds as on May 2000 while private sector funds have assets of Rs 25,079 crore. Of late, private sector funds — like Prudential ICICI, Sun F&C, Kothari Pioneer, Birla Mutual Fund and DSP Merrill Lynch — have been expanding rapidly, giving the UTI a run for its money.

Private sector mutual funds comprising five purely Indian players, seven predominantly Indian joint ventures and nine predominantly foreign joint ventures have together witnessed sales of Rs 5,015 crore and redemptions of Rs 4,034 crore in the month of May 2000.

However, schemes sponsored by six banks came under severe redemption pressure in May with outflows amounting to Rs 161 crore while sales stood at Rs 95 crore. Total assets under their management stood at Rs 5,988 crore. The mutual fund schemes sponsored by four institutions also witnessed outflows of Rs 216 crore due to redemptions and could garner sales of only Rs 95 crore. As on May 31, total assets under their management was Rs 3,083 crore.