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Reemerging PSU Funds

A new breeze of life is sweeping through once written off public sector fund families. LIC, Canbank and PNB comeback with their solo fund gives enough hope of their re-emergence

A new breeze of life is sweeping through once written off public sector fund families. LIC, Canbank and PNB comeback with their solo fund gives enough hope of their re-emergence.

SBI was the first to get its act in place to run neck-to-neck with the private players in the marketplace for sometime now. The others to benefit from reorienting themselves are LIC, Canbank and PNB. LIC Bond fund has an asset base of Rs 1200 crore as on November 30, 2001. While Canbank flags its largest gilt fund -- Cangilt (PGS) with an asset base of 245 crore as on November 28, 2001.

Some of these AMCs came close to extinction being unable to attract any new money. The reason isn't a mystery. The prime has been managing and embracing change in a fiercely competitive mutual fund marketplace. All these funds have been dominantly closed-end fund families where the key rules of business are different. The key was to raise money every now and then and continue managing it till its tenure.

But rules changed fast with private entrant. Now with wide variety of open-end funds available, the rule is raise money, impress investors with your performance, keep him posted, be prepared to return his money anytime and pamper the distributors to push your funds.

These funds were also busy combating problems in hand. Canbank was busy managing its guaranteed return crisis created by Canstar and Cantriple. Now the fund is getting its act together. Says R.K.Madhukar, Executive Director, Canbank Investment Management claims "We have left our past behind". LIC Mutual also took its time getting out the convenient fund mobilisation through its Dhanvarsha series, the closed-end guaranteed return fund. And PNB Mutual faced a similar crisis with its PNB Premium Plus, and now making a comeback with its blockbuster - PNB Debt Fund. Says Ranjan Dhawan, Managing Director, PNB AMC "With regained vitality we are well on our way to execute our business plan ourselves".

Still there are public sector fund families which remains unshaken. These include -- BOI, BoB, GIC and Indbank mutual. Any way they have been non-operative for a while and their days may be number till the redemption of their last, not far away.

The initial success is not a big break through. But it reflects a desirable change, a new way of doing business and sweet reward to embark on bigger change to regain their lost glory.

Ray of Hope: Public Sector Bond Funds
    Size (Cr)      Return
   03/00 03/01 11/01 YTD (29/11)
  LIC Bond 180.21 561.77 1200.00 22.75
  PNB Debt 30.73 35.57 76.49 22.66
  Cangilt (PGS) 131.71 157.62 244.55 16.33
 
value