Pioneer ITI Ltd, a private mutual fund, today said that its assets under management have grown by 25 per cent in the last four months from Rs 2,047 crore in April 1, 2001, to Rs 3,019 crore in July 31, 2001.
Inflows during the same period were Rs 2,239 crore. Vivek Reddy, chief executive of ITI Pioneer, said, "The strong inflows into income and liquid funds in the last four months have compensated against equity funds. Despite this, we have attained a 48 per cent of the total market share in equity category and equity contribute 50 per cent of assets".
While the share of equity funds in assets has dropped to Rs 1,183 crore in July 31, 2000, from Rs 1,277 crore in April 1, 2001, the share of income and cash funds increased to Rs 1,499 crore and Rs 337 crore from Rs 915 crore and Rs 214 crore, respectively.
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Hence, he reasoned that though the equity markets fell sharply, the overall mutual fund industry has not underperfomed as revealed by the increase in assets under liquid and income funds.
"We will be developing innovative products that would tap the huge investible surplus lying with the public as witnessed in the sharp increase in bank deposits," he added.
To a query whether the market would fall further, he said movement downside was limited as it had factored most of the negatives and the probability of Sensex losing another 10 per cent was only 10 per cent.
"There exits a high probability, say 70 to 80 per cent, for Sensex gaining another 40 per cent in the next two years as the positives outweighs the negatives at this juncture," he added.
Among the positives, Pioneer ITI has listed the successful restructuring of top companies to face global competition and the prevailing lower interest rates as two prominent factors.
Meanwhile, Pioneer ITI today announced the launch of Pioneer ITI Index Find, a open ended growth index scheme with the choice of two indices- BSE Sensex and NSE Nifty. The initial issue will open for investment for one day on August 27, 2001 and will be available for subscriptions on an ongoing basis from August 28, 2001.
Reasoning the launch of Index fund now, R Sukumar, vice-president (investments), Pioneer ITI, said, "Both the Bombay Stock Exchange Sensex and the National Stock Exchange Nifty, in the past 10 years, have given an average return of around 18 per cent. Hence, the index fund will offer an excellent opportunity for investors to make money in the medium to long-term". The index fund is projected to give a return of 13 to 15 per cent.
He said the investment objective would be to provide returns similar to the indices and to keep the tracking error in the region of plus or minus 2 per cent. As per the offer document, a maximum of 100 per cent of the asset allocation will be securities covered under Nifty/ Sensex with a provision to invest 20 per cent in liquid assets to provide liquidity.