Mutuals See Dip In Net Inflow

Net inflows into equity-oriented mutual funds have slumped over the last seven months while the sensex surged over 1,000 points. The net inflows dipped around 73 per cent to Rs 8,000 crore from Rs 29,000 crore in the year-ago period.
According to industry estimates, Rs 45,000 crore have been invested in the January-June period against Rs 65,000 crore during the same period a year ago.

The market moved up from 9900 points to about 10600 points during the January-June period in 2006, touching 12000 points midway. This year, the market was at 14000 points in January and reached about 14600 in June, falling to about 12900 in February.

While there is no significant difference in the sensex's growth trend this year, the equity-oriented mutual funds could not register inflows similar to those of the year-ago period.

"There has been a recent slowdown in the industry. We will attribute this mainly to a lack of investor education and the introduction of mandatory PAN by the Securities and Exchange Board of India (Sebi). Small investors, especially in tier-II and tier-III cities, have been worst hit by the PAN norm. We have requested Sebi to implement the PAN norm in a phased manner," Amfi chairman A.P. Kurian told The Telegraph.

According to Value Research Online CEO Dhirendra Kumar, the dip in the inflows is mainly because of sporadic movements in the market this year.

"Although the market has rallied by almost 1000 points, the growth has not been steady. Fresh investments are generated from new fund offers (NFOs). Unlike this year, there were quite a few good NFOs, which contributed to the inflows last year," Kumar said.

"The year 2006 saw a large collection through NFOs such as Reliance Equity, Fidelity Special Situations, ICICI Pru Fusion, Kotak Lifestyle and Principal Infrastructure & Services Industries Fund. Investors were confident and bullish last year," said Vijay Kumar Goel at Motilal Oswal Financial Services.