MFs record Rs 83,081 cr net inflow in FY10

The domestic fund market registered positive net inflows in 2009-10 due to an improved economic condition and easy availability of liquidity in the system.

The mutual fund industry witnessed a net inflow of Rs 83,081 crore as against a net outflow of Rs 28,297 crore in FY09. According to latest data from the Association of Mutual Funds in India (AMFI), debt funds saw the highest net inflow of Rs 96,578 crore as against an outflow of Rs 32,168 crore in the previous financial year.

The assets under management as on March 31, 2010, stood at Rs 6,13,979 crore compared to Rs 4,17,300 crore last year — a rise of 47.13 per cent.

Rajiv Anand, CEO of Axis Mutual Fund, said, “Growth in the fund market is because of easy liquidity throughout the year and increase in investments by banks.” Companies pumped in a significant amount of money.

Echoing Anand’s views, the Chief Investment Officer at Shinsei Mutual Fund, N Sethuram, said, “There have been significant inflows into money market funds with huge contribution from banks. Companies also contributed as they scaled down capex plans.”

However, equity schemes could not garner much despite a market rally of close to 80 per cent. The ban on entry load on equity schemes imposed by the Securities and Exchange Board of India (Sebi) was a major setback.

The equity category saw a net inflow of Rs 595 crore this fiscal as against Rs 1,056 crore in FY09 — a decline of 43.64 per cent.

“In view of the rally in equity markets, net inflows into equity schemes was negligible, primarily due to Sebi’s entry load ban effective from August 1, 2009. Moreover, investors’ confidence in equity markets came only when Sensex was around 14,000, and after that the rally was steep and time elapsed fast,” said Sethuram.

Fund players expressed optimism about inflows into the equity segment in the current financial year on the back of building up of confidence in equity markets. “As markets today are relatively stable, confidence is back. We expect the year to see good inflows into equity and more retail participation,” said Sethuram.

According to Anand, investors used the rally to exit, as many of them had got stuck during the 2007-08 meltdown. “Liquidity tightening measures are likely to keep inflows into money market funds subdued in FY11.”

During the year, equity-linked saving schemes posted a net inflow of Rs 1,554 crore, a dip of 47.64 per cent, as against a net inflow of Rs 2,968 crore in the previous year.

In 2009-10, the fund industry saw a net outflow of Rs 1,62,165 crore. The largest outflows were reported in income funds (Rs 1,64,487 crore) followed by equity schemes (Rs 2,016 crore), fund of funds investing overseas (Rs 107 crore) and balanced funds (Rs 40 crore).