Volatile market conditions impact MF flows in '08

Inflows into mutual funds were impacted due to volatile conditions in the stock market in 2008 and for the first time in five years investors preferred public sector fund houses over private ones, the Economic Survey states.    

"Reflecting the volatile capital market conditions, the net inflow of saving into mutual funds, which had recorded a steady rise during 2005-07, turned negative in 2008," the pre- budget survey tabled in the Parliament today stated.     

The mutual fund industry, including the private and public sector fund houses, saw redemption of Rs 624 crore in 2008, the survey showed.     

It also revealed that public mutual funds were able to mobilise a higher amount in the year compared to the redemptions seen by private fund houses, a trend seen for the first time since 2004.     

The public sector mutual funds mobilised Rs 14,587 crore in 2008, except UTI MF which recorded net redemption of Rs 2,704 crore in the year, it said. While, the private sector mutual funds recorded a net outflow of Rs 12,506 crore.        

In 2007, private sector MFs had mobilised Rs 1.20 lakh crore against Rs 8,259 crore collected by public sector funds' in the year.