Corporate fund inflow into debt funds of domestic MFs double

Mumbai: The corporate fund inflow into the debt funds of domestic mutual funds during the fiscal 2002-03 has almost doubled and touched a significant Rs 9,000 crore.

This is in sharp contrast to the fact that throughout the last year these funds had collected only Rs 4,100 crore. Even in 2000 and 2001 the whole year's inflow was only Rs 7,175 crore and Rs 9,128 crore, respectively.

According to the data available, the top six short-term debt funds attracted nearly Rs 1,700 crore. Prudential ICICI's corpus surged by nearly Rs 400 crore, followed by HDFC and Birla Bond Fund. Investors find these funds attractive as the average annualised returns from these are about 6-6.50 per cent.

Most leading banks offer between 4 and 5 per cent on short-term deposits. Says IL&FS Asset Management Company chief investment officer (fixed income) Ramgopal K: "The awareness of the mutual fund products has increased as investors have started realising the importance of the anytime exit option available in open-ended schemes. And though the mutual fund products cannot be compared with investment in banks, the falling interest rates have attracted more investors towards short-term debt funds."

Says Birla Sun Life Asset Management Company managing director S K Mitra: "Corporates have been investing heavily in the debt market for the last few months as there has been good returns in short-term funds compared to the market returns of around 5 per cent."

According to analysts, security and attractive yields have brought even foreign investors into the debt market. So far, this year, foreign portfolio investments in debt amounted to Rs 1,433 crore, which is three times more than their last year's investments. These investments are driven by arbitrage opportunity between the overseas and the Indian gilt market.