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Private funds look up

Jul 25, 2001

Even in this moment of crisis, private funds have reason to be relieved. The monthly data disclosed by AMFI (Association of Mutual funds in India) for June 2001 shows a rise in the net assets under management of private funds.

The assets under management of private funds rose to Rs 344 bn in June 2001 from Rs 318 bn in May 2001, a surge of over 2%. The rise replicates the fall posted by UTI in this month. Private funds’ total sales of Rs 234 bn far outstripped redemptions of Rs 133 bn, resulting in net inflows of Rs 101 bn for June.

Private funds over the past few years have shown a significant rise in net assets under management. A lot of this growth has come at the expense of UTI. June 2001 in particular saw a huge outflow from US-64 and private funds may have benefited from it in some manner, although there is no way to be certain about it.

In the short run, the US-64 crisis may actually backfire on the private funds. A lot of investors have turned very pessimistic with mutual funds and may not be willing to try investing in another fund so soon. There is an education process that needs to be undertaken by private funds to demarcate UTI vis-à-vis other private funds and the message has to be put across clearly to the investor.

Mr. Sanjay Sachdev, MD and CEO of IDBI-PRINCIPAL Asset Management Company, admitted as much in an interview to personalfn when he said, ‘That is where we have to spend time in educating investors in telling them about the different kinds of (mutual fund) options available to them. However, it will take time. Nothing happens overnight in our country. Unfortunately in all such messes (like in US 64), the investor is the last person who finds out.’

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