Vibrant markets propel MFs past US$ 1 bn mark - Views on News from Equitymaster

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Vibrant markets propel MFs past US$ 1 bn mark

Feb 22, 2000

A strong surge in the stock markets over the past few weeks has helped three mutual funds (MFs) - Birla Sun Life MF, Prudential ICICI MF and SBI MF race past the US$ 1 bn mark (Rs 43 bn).

Birla Sun Life MF has clocked net assets of over US$ 1 bn, Prudential ICICI MF has registered net assets of US$ 1.06 bn, while SBI MF has assets of US$ 1.02 bn in January 2000.

One of the main reasons attributed for the spectacular show by these MFs is of course the peaking of the BSE Sensex as well as the CNX SNP 50 on the dramatic rise in IT stocks. Given the fact that most MFs have an IT-specific fund, combined with the fact that they also have large exposure to IT stocks in their plain vanilla growth funds, has swelled the net assets of these MFs to all-time highs. Kothari Pioneer MF is a case in point. From Rs 14 bn in December 1999, net assets of the MF have doubled to Rs 28 bn.

Another reason behind the excellent showing of MFs has been strong demand for MF products at the retail level. The middle class individual investors (the largest investment community) find stock prices beyond their reach, and turn to MFs which are their best bet. This is because performance of the MF industry is generally a reflection of the performance of the stock markets. Moreover, introduction of sector-specific funds (especially IT) has found favour with a large number of retail investors who have hopped on, after having missed the IT bus earlier.

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