MF assets under management touch an all-time high

09 November 2006

CRISIL Risk Adjusted Return Ranking (CRISIL~RRR), the monthly ranking report for mutual fund schemes from CRISIL FundServices. The CRISIL~RRR for the month of October 2006, covered 12 asset classes and 274 schemes, representing almost 55 per cent of the assets managed by domestic funds. The CRISIL~RRR measures the return performance of the schemes over the period of analysis, adjusted for the risks they took to get those returns.

The equity markets continued to be buoyant, with the S&P CNX Nifty reaching an all-time high. Favorable corporate results for the quarter ended September 2006, robust foreign institutional investor (FII) inflows and strong underlying economic fundamentals were the key factors. External factors such as firm Asian and US markets, unchanged interest rates announced by the US Federal Reserve, and stable oil prices supported the market uptrend. The gross investments (sum of buy and sell transactions) of MFs, however, remained almost constant during September and October.

Capital protection-oriented schemes made their debut in India. The scheme aims at protection by creating a structure to ensure capital protection. Many asset management companies (AMCs) have initiated moves to launch such schemes. October also saw MFs' assets under management (AuM) recording all-time high figures of Rs3.09 trillion - a rise of over 6 per cent over the previous month. Fixed Maturity Plans continued their dominance on the new fund offer (NFO) circuit.

The Reserve Bank of India encouraged mutual funds to invest more overseas, by increasing their overseas investment limit from $2 billion to $3 billion, in its mid-term monetary policy review. Securities and Exchange Board of India implemented the T+1 settlement for MF liquid schemes from October 16, as well as restricted MFs and venture capital funds from sharing key personnel.

In the equity diversified category:
Sundaram BNP Paribas Select Midcap - Growth continued to top the category at UTI Infrastructure Fund - Dividend moved up one notch to CRISIL~RRR 2; HDFC Growth Fund - Growth was at CRISIL~RRR 3.