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Resources mobilized by mutual funds
Posted Date: 20 May 2008 Resource Type: Articles/Knowledge Sharing Category: General
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Posted By: bharath sudar Member Level: Platinum
Rating:  Points: 2
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The mutual funds during 1998-99 suffered a serious set back by reporting a sharp decline in net resource mobilization. There was a net outflow of Rs.950 crore during the entire year. The concern for this situation got reflected in the incentives offered to mutual funds scheme in the Union Budget for 1999-2000.
The performance has been extremely good during 1999-2000 as the gross amount mobilized by them increased to Rs. 61,241.23 from Rs. 22,910.93 crore during 1998-99 showing an increase of around 190 per cent in 1999-2000. The Government exempted the income of unit holders received from UTI or from mutual fund.
The Government further exempted income distributed under the US-64 scheme and other open-ended equity oriented schemes of UTI and mutual funds from the 10 per cent flat rate of tax. These fiscal incentives have favorably impacted the resource mobilization by the mutual funds industry. However, redemption had been very heavy which form nearly more than 100 per cent in 1998-99 and 69 per cent during the current financial year.
As regards the net resource mobilization, there has been a massive inflow of Rs.18, 969.88 crore during the current financial year under review as against a net outflow of Rs.949.69 crore during the entire financial year of 1998-99.
Details of funds mobilized, repurchase/redemption amount and the net inflow/outflow of funds for the financial year 1999–2000 are given in below table.
Resources Mobilized by the Mutual Funds
As regards sector-wise performance, there was a net inflow of Rs.15, 426.99 crore in case of private sector mutual funds (net inflow of Rs.1, 452.90 crore during 1998-99) followed by UTI with a net inflow of Rs.4, 548.32 crore (net outflow of Rs.2, 939.53 crore during 1998-99).
On the contrary there was a net outflow of Rs.944.92 crore in case of public sector mutual funds (net inflow of Rs.335.16 crore during 1998-99) due to massive redemption / repurchase of close ended schemes. Thus it is found that probably organizational and ownership structure has been influencing the performance of mutual funds.
It is observed that in case of private and public sector mutual funds, the entire net inflow of fund has been from open-ended schemes and there was net outflow in respect of close ended schemes. However, incase of UTI, 99.28 per cent of net inflow has been from the close ended schemes.
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