Bull run fails to make an impact on equity-based mutual fund schemes

Mumbai: The bull run in the capital market, where the Sensex gained over 300 points in June 2003, has failed to produce any positive impact on the equity-based mutual fund schemes. The equity MF schemes have witnessed a withdrawal of over Rs 700 crore from its leading balance and money market liquid funds.

The assets under management of the equity funds mirrored the massive gains on the indices. The assets grew almost 10.05 per cent from Rs 11,069 crore in May to Rs 12,181 crore in June. But investors did not prefer to make fresh investments into equity schemes, which was evident by the fresh outflows registered by the equity funds.

Says Kotak Mahindra MF chief marketing officer Prakash Dalal: "While there has been a gross inflow of cash into the equities schemes, a lot of old investors who had entered at lower levels have booked profit in this bull run. Besides, debt has always been a safe investment option for high-net individuals."

The trend shows that income (debt) funds were clear winners in this case as huge inflows continued to flood these schemes. They saw massive inflows to the tune of Rs 4,057 crore last month. Among debt funds, gilt schemes were another category that caught the investors' eye, registering inflows up to Rs 533 crore.

Says Canbank MF equity fund manager Umesh Kamat: "The general feeling among the investors is that the market is over-heated, thus booking profit at higher levels."

A chief investment officer with a foreign MF says while the asset under management under various equity schemes have increased, there has been some redemption on account of high dividend yield and profit bookings by investors.

The MF industry saw a facelift this June with HDFC and Zurich merger finally coming into effect and also IDBI exiting IDBI Principal MF. The assets under management of the entire mutual fund industry grew 6.34 per cent with the maximum growth seen in the bank-sponsored MFs.

Among the individual asset management companies (AMCs) that saw a huge spurt in asset size, Unit Trust of India figured on top of the list while Prudential ICICI ranked second. Currently, Prudential ICICI is the top private AMC in terms of assets size. In spite of the merger with Zurich, HDFC could not manage to acquire the top slot among AMCs in terms of assets.