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April Mop-up in Bond Funds Surges

The Debt Funds are surging ahead with more investors thronging them, shunning behind the Equity Funds which witnessed a slump in their mobilisations,courtesy dull stock markets.

Asset management companies seem to be building their mobilisation strategies around bond funds. After mobilising Rs 4,000 crore in March, open-end bond funds mopped up another Rs 2700 crore for April. The net mobilisation, though is higher for April at Rs 1449 crore against a net outflow of Rs 470 crore in March. The month is traditionally good for bond funds when corporate investors re-enter after exiting in March for balance sheet considerations. The inflow in the first month of the fiscal is also attributed to impressive returns on the back of interest rate cuts and depressed equity markets. With the ban on badla or forward trading, some of the financiers have parked investments in fixed income funds. Further, some fund houses have lapped up big investments in fixed maturity plans.

With a marginal revival in equity markets and sharp inflows in bond funds, the assets under management for the fund industry was at Rs 93,101 crore on April 30, 2001. While there has been an accretion of over Rs 2,500 crore, the assets are no where near the 1.13 lakh crore mark of March 2000. However, it has been a bad start for Unit Trust of India in the new fiscal with a net redemption of Rs 297 crore.

The net inflow in equity funds for the month was a paltry Rs 34 crore with a gross investments at Rs 482 crore. With the ban on dividend stripping, the movement of investments in equity funds will now reflect the true picture. For instance, even in the midst of sliding equity markets and negative returns, the inflows in February 2001 were a staggering Rs 2583 crore but outflows were still higher at Rs 2628 crore. Such inflated figures resulted due to sharp movement of investments in schemes, indulging in dividend stripping.

Among the three broad categories, balanced funds are the worst hit with a net redemption of Rs 369 crore. The category received fresh investments of only Rs 124 crore but outflows were nearly Rs 500 crore.

With the continued slump in equities, the share of equity funds in the total assets under management has fallen from 24% in April last year to the current level of only 14%. In absolute terms, growth funds now manage only Rs 13,300 crore against Rs 25,500 crore last year. On the other hand, income funds now at a staggering 54% or Rs 50,663 crore!

Some Respite
Category  Open end  Close end  Assured return  TOTAL
Income 24363 6486 19814 50663
Growth 8600 4705 - 13305
Balanced 19175 221 - 19396
Liquid 4982 - - 4982
Gilt 2448 - - 2448
ELSS 355 1952 - 2307
All Figures in Rs Crore