Mutual funds turn around during 2008-09
CAPITAL MARKETS SHOW SIGNS OF REVIVAL
ECONOMIC SURVEY 2008-09
A turnaround has been noticed in the performance of Mutual Fund industry, which had remained subdued during 2008, says the Economic Survey 2008-09. Mutual fund investments (net) in equity markets turned positive in March 2009 and were Rs. 2,320 crore during April-May, 2009 while they invested Rs. 36,791 crore in debt instruments during the same period. There is scope for expansion of mutual fund industry as only 7.7 per cent of total financial saving was allocated to mutual funds in 2007-08. As per the Survey, the retail participation, which is presently estimated at 15 per cent, is expected to increase in the years to come as availability of products and investor education improve and the industry takes steps towards transparency and sound corporate governance practices to generate investor confidence.
According to the Survey, assets under management of mutual funds declined sharply from Rs. 5,49,936 crore at the end of 2007 to Rs. 4,13,365 crore at the end of 2008. A perceptible shift was noticed from growth-oriented scheme to income/debt oriented schemes to income/debt oriented schemes. Assets under income-oriented schemes in 2008 were almost at their previous year’s level and accounted for 47.7 per cent of total assets under management at the end of 2008. The decline in assets was seen across the schemes, the exceptions being Gilt and Gold ETF Schemes, which showed larger assets under management in 2008.
The Survey has expressed satisfaction that performance of the capital market has lately shown signs of revival of investor interest and confidence – both domestic and foreign institutional investors. Net investment by FIIs in equity instruments amounted to US$ 5.4 billion during April-May 2009. This has resulted on account of several policy initiatives taken by the Government relating to the Primary Market, Secondary Market, Mutual Funds, Foreign Institutional Investments, Corporate Debt Market and Regulatory changes, during 2008-09.
