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Jun 06, 2012, 10.33 AM IST
Global economic uncertainty coupled with structural issues faced by the domestic economy would lead to debt-oriented mutual funds attracting higher fund flow, according to mutual fund officials.
The equity-oriented mutual funds could also attract funds in the second half of this fiscal if the situation improves on the global and domestic fronts, they said. "Recently, the mutual fund industry saw more flows into the debt-oriented funds, especially on the fixed maturity plans (FMPs) and short-term funds. Going ahead, investors' interest is expected to be more in these debt-oriented funds due to continuing uncertainty in both domestic and global economy," IDBI Mutual Fund managing director and chief executive Debasish Mallick told PTI here. Given the possibility of reduction in interest rates, fund flows into FMPs and short-term funds will be more in the near-term, he said.
"When there is a likelihood of reduction in interest rates, fund flows will be more into FMP-kind of schemes. Also, short-term funds (debt oriented) are also likely to attract more funds due to possible capital gains," Mallick said. Referring to investment in equity schemes, industry experts said it was difficult to attract fresh funds due to lacklustre performance of the equity market. "Fresh fund flow to equity schemes will be difficult at this point in time. However, I don't see any redemption pressure due to a panic kind of reaction," he said.
UTI Mutual Fund executive vice-president and fund manager Swati Kulkarni said though fresh fund flows to equity schemes seems little difficult, these schemes are likely to attract investors' interest if the situation improves. "If the issues of twin deficits (fiscal deficit and current account) are addressed and the global situation improves, equity market is at attractive valuation to woo funds," she said. Though it is difficult to time the market, second half of this fiscal is expected to be better for the equity market, she added. The mutual fund industry posted a nearly 16 percent growth in its average assets under management at Rs 6.8 trillion as of April on the back of higher inflows to money market funds. The rise in AUM was mainly due to inflows of around Rs 757 billion in liquid funds.
May 23 2013, 16:33
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May 23 2013, 09:33
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