CREDENCE FUNDINSIGHT FUND NET ASSETS REVIEW - JULY 2004

In line with the trend at the start of the fiscal, the mutual fund industry broadened its growth in terms of assets under management by 0.88% in the month of July 2004. The total assets under management (AUM) stood at Rs 157,025 crore as on July 31, 2004 as compare to Rs 154,649 crore on June 30th 2004, a net appreciation of Rs 1376 crore. The reviving equity markets coupled with fresh inflows on account of budget related clarity on the mutual fund investments boosted the growth in asset base.

The sharp rise in the industry share of bank-sponsored mutual funds and the drop in institution-sponsored mutual funds was due to the acquisition of IL&FS MF (institution) by UTI MF and the huge inflows seen in SBI MF. The industry share of predominately-foreign joint venture mutual funds rose while those that of predominately Indian joint venture witnessed a drop. None of the four predominately-Indian joint venture mutual funds witnessed inflows in July’04

Going ahead, the performance of equity funds that move in tandem with the stock market would be the major trigger for investments in mutual fund. The government’s thrust on agriculture industry and mutual funds’ initiatives to attract investors in the rural areas might lead to an increase in rural inflows in the coming months. Investments in Liquid funds and Floating rate bond funds would continue to corner better inflows from investors eyeing steady returns in an otherwise volatile debt market.

Industry Snapshot
· During the month under review nearly 38% (10 funds) out of the 26 funds studied witnessed a drop in the asset base. Medium size funds namely LIC MF and JM MF were the only two fund houses that saw more than 10% dip in asset base. They also topped the list of funds with outflows.
· The top 5 fund houses retained their respective positions as in the previous month. However, Pru ICICI MF and HDFC MF figured among the top 5 funds that witnessed outflows with redemptions of Rs 302 crore and Rs 245 crore respectively.
· UTI MF on the back of the acquisition of IL&FS MF (around Rs 2000 crore) crossed the Rs 21000 crore milestone while SBI MF jumped into the league of Rs 6000 crore asset base with a net inflow of nearly 20%. SBI MF raised around Rs 450 crore through its newly launched Floating Rate Fund in July’04.
· Templeton MF, Kotak MF, Standard Chartered MF, Morgan Stanley MF and Canbank MF not only amassed inflows for the second consecutive month but also posted higher growth rate in assets.
· On the contrary, JM MF has seen increased redemptions since May’04 while Birla MF and LIC MF witnessed redemptions for second consecutive month.
· BoB MF leads the list of trend busters along with SBI MF, HSBC MF and ING Vysya MF that
witnessed comparatively higher inflows in July’04 than the outflows seen in the preceding month.
· SBI MF jumped 3 slots ahead of its last month rank to enter the top 10 league at the 9th position dislodging Tata MF to the 12th position in July’04. Subsequently, Kotak MF slipped one rank to the 10th position.

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