- Falling equity markets and regulatory developments weighed heavy on the domestic fund industry, therefore denting its assets in 2011. On a year-end basis, the assets of the industry shrunk for the second year in a row--by 2.4% in 2011, as against a fall of 6% in 2010.
- Net inflow into equity funds bounced back to Rs. 6,848 crores in 2011, after a disappointing outflow of about Rs. 16,000 crores in 2010. Investors poured in money during market dips, during the year. However, collections from equity new fund offers (NFOs) continued to plunge, and so did the number of new launches. There were only 10 new equity open-end funds launched this year, which managed to mobilize only Rs. 612 crores. This is down from the hey-days of 2007, when there were about 48 new equity fund launches, which managed to mobilize in excess of Rs. 29,000 crores.
- Fixed Maturity Plans (FMPs) were the saviour for the fund industry in 2011 with record collections of Rs. 118,000 crores and about 700 of these funds being launched during the year. Rising interest rates were conducive to these funds mobilizing such huge sums during the year. In 2010 too, when interest rates were hardening, there were 288 FMP launches which together mobilized around Rs 72,561 crores.
- Gold Fund of Funds (FoFs) rake in the moolah for Gold ETFs in 2011, and account for almost a third of their assets at the end of the year. The assets of gold ETFs grow by a strong 160% in 2011, and inflows grow by 134% over the same period. These funds continued to shine in the volatile markets of 2011, emerging as the best performing asset class for investors, with returns in excess of 30%.
- Dwindling returns reduce the luster of Monthly Income Plans (MIPs) and cause their assets to shrink in 2011, after growing by a hefty 255% and 132% in 2009 and 2010 respectively.
- Assets of liquid funds tumble 45% since April 2011, after the RBI capped bank’s investment in mutual funds to 10% of their net worth. Post this guideline, bank’s investment into mutual funds (of which liquid funds constitute a large part) started shrinking quite rapidly from a peak of about Rs. 124,000 crores in April 2011 to Rs. 27,000 crores in December 2011 end—a drop of about 78%. However, for the full year (January – December), the assets of liquid funds are still higher by 36%.
- Disappointing returns by infrastructure funds in 2010 and 2011, leads to exodus of investors--with assets falling by 42% since end of 2009. These funds delivered an average return of -32.6% during the year, compared to Nifty’s fall of about 25%.
- In 2011, defensive sector funds and global funds restrict the fall in equity markets, while gold ETFs continue to shine. 14 of the top 20 performing equity funds in 2011 were global funds, whose returns were further boosted by the sharp depreciation in the rupee. Short term debt funds outperform in 2011 (on higher rates), but long term debt funds and gilt funds make a comeback towards the end.
- Mid-cap equity funds do relatively better than their benchmark index in 2011. A look at longer periods (3 & 5 years) reveals that even though a number of funds have underperformed the index; the larger funds have not fared that badly.
- Equity fund managers increased exposure to defensive sectors, while allocation to industrials sector was cut in 2011. Bond fund managers have doubled average maturities of most bond fund categories since March, on expectation of rates peaking out.
- The growth in consolidated Profit After Tax (PAT) of the 10 largest AMCs was flat for the year, after growing by 62% in FY09-10. Small fund houses continued to dabble in losses.
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Source : morningstar