Open-end MF schemes see spurt in inflows

Chennai, March 18: Mutual Funds have never had it so good. Close in the heels of a sharp jump in the net asset values NAVs of their gro...

Chennai, March 18: Mutual Funds have never had it so good. Close in the heels of a sharp jump in the net asset values NAVs of their growth funds, they are now witnessing a significant increase in the collections. The post-budget all-India collections, with respect to open ended equity schemes, made by some of the leading mutual funds in the country during the first 15 days of March have already surpassed the collection figures for whole of February.

ITC Threadneedle has collected Rs 35 crore in the first 15 days of this month as against Rs 20 crore in February. Kothari Pioneer Mutual Fund8217;s collection of Rs 20 crore this month has already equalled that of February.

Collections of Birla and Prudential ICICI mutual funds also indicate a similar trend. Industry players say that this is the first time investors have shown interest in equity schemes in a big way. Ever since investors began to look at mutual funds as a vehicle for investment, a major chunk of the money went towards income funds. This wasattributed to the poor state of the capital market and the consequent low returns from the mutual funds. Out of every Rs 100 collected, 90 per cent went to income funds and the rest was divided between equity and balanced funds.

Says T P Raman, managing director of Sundaram Newton, 8220;there is a distinct shift in the mood. The post-tax returns of equity funds would be far superior to income funds and other investment options under the existing scenario.8221; His growth fund, which only recently had became open ended, has witnessed a surge in collections after the budget. This view is also echoed by Prem Khatri, vice president-marketing, Kothari Pioneer Mutual Fund. He attributes the increased interest in growth funds mainly to the tax exemption. But the fancy for income funds does not seem to have waned. 8220;The increased interest in equity schemes is not entirely as a result of a shift in the investors8217; preference from income schemes.

It is also on account of many investors coming in for the first time,8221;says Roshini Bakshi, senior VP Marketing, Prudential ICICI. This is construed as a positive development, by the industry, as it indicates a possible expansion of the mutual fund market. But this time, mutual funds do not want to repeat the past mistake of make hay while sun shines8217;, adopted by certain players in the industry, who after huge collections in 1992, failed to deliver in terms of performance.

Foreign banks all set to make foray into MF segment

The mutual fund sector in India is all agog with the imminent entry of some large foreign banks including Citibank and American Express into the segment. At present no foreign bank is operating in this sector. The tax breaks this sector got in the Union budget is acting as a spur on existing players as well as fresh entrants.

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Industry sources said that mutual funds promoted by banks have traditionally done well 8211; State Bank of India, Indbank, Bank of India, Canbank are cases in point. Foreign banks like Citibank and Amex have the advantagethat they have been in India for a long time and are aware of customer ssentiments in the country and the behaviour of stock markets. MFs have become attractive investment options for retail investors with returns varying between 12 to 15 per cent.