MF industry to grow 25% by July 2002: Amfi chief

New Delhi, Aug 31: Despite the US-64 imbroglio, the Association of Mutual Funds of India (Amfi) is optimistic the capital market would pick up in the third quarter and the mutual funds (MF) industry is likely to grow by 20-25 per cent to about Rs 1,25,000 crore by July 2002.

“Markets have bottomed out. By October-November, markets should revive if economy starts performing better. MF industry will maintain a growth of 20-25 per cent this fiscal,” AMFI chairman AP Kurian said on Friday.

He said the total asset under management by 400 odd MFs stood at Rs 98,969 crore in July 31, 2001, which is expected to go up to Rs 1,25,000 crore by July 2002.

“MF sector has performed better than most other industries offering a compounded annual growth rate (CAGR) of 22-23 per cent in the last five years and it still has a bright future,” Mr Kurian said.

He admitted that investors were more concentrated on debt and liquid schemes now rather than equity.

“The Sensex fell 43 per cent from its peak levels of over 5930 points in February 2000 to 3287 now. This led to severe erosion in value of most active scrips that mutual funds had invested,” he added.

Net asset values (NAV) of equity schemes was down by 20-30 per cent while the fall was more drastic at 40-70 per cent for funds dedicated to the technology, media and telecom sectors, the Amfi chief said.

He, however, said “It now provides a better opportunity to invest in these equity funds.”

“Markets were showing a healthy sign of regaining investor confidence even after the US-64 muddle in July and sales during July had shown a marginal fall as compared to previous month,” Mr Kurian said.

The US-64 freeze, he said, had created a ‘little anxiety’ among investors but redemptions have tapered off now.

The Unit Trust of India (UTI) opened the windows for repurchase and sale of units since August one after government announced a special package.
“The immediate response of the government by way of a special package for UTI had created confidence in the minds of the people,” he added.

He hoped that after the restructuring, UTI would perform better. The Trust had Rs 54,233 crore worth of assets under its fold which is over 45 per cent of the total assets under management by all MFs as on July 31, 2001.

MFs sponsored by PSU banks including SBI MF had assets worth Rs 3,557 crore till July 2001 while it was Rs 4,130 for FI-sponsored funds.

Private sector funds have gained their market share and had Rs 37,049 crore worth of assets under their management.

The industry witnessed a slump last fiscal on account of severe redemption of UTI schemes mainly US-64. Total assets under management of all MFs dipped to Rs 98,969 crore last fiscal from Rs 1,03,089 crore in the previous fiscal when the Sensex peaked to 6000 levels.

UTI sold units worth of Rs 2,921 crore during April-July 2001 while redeeming units worth Rs 6,187 crore during the same period.

-- PTI