NAVs of equity plans at new peak

Equity schemes of mutual funds have outperformed benchmark indices over the last one month and have been running neck and neck with the indices in the last one week.

Data show that as on November 29, 2004, the net asset value of 65 equity schemes have hit their all-time highs.

Further in the last one month, diversified equity schemes have posted returns of 9.4 per cent, while the Bombay Stock Exchange Sensex has gained 8.56 per cent and the National Stock Exchange S&P CNX Nifty has risen 8.55 per cent, according to data from mutualfundsindia.com, a provider of data on Indian mutual funds.

Over the last two weeks, returns in equity schemes have been of the order of 3.8 per cent compared with 2.69 per cent gains in the Sensex and 3.23 per cent in the Nifty.

Of course, the range of returns is fairly wide "" from a high of 7.83 per cent to losses of 0.36 per cent over the last two weeks and between gains of 20.26 per cent and a 0.26 per cent loss in the last one month.

But the industry is seeing its corpus not growing with the benchmark indices. Industry officials said investors are taking away money from the table at these high levels.

Krishnamurthy Vijayan, chief executive officer of JM Mutual Fund, said, "There were banks which invested in mutual funds at high levels some months back when the Sensex touched 6000. Now that the index is back to those levels, they have redeemed their investments."

Retail investors have also been redeeming their investments rather than put in money as they are uncertain whether the stock markets will sustain at these levels.

Ajay Bagga, chief executive of Kotak Mutual Fund, said, "High net-worth individuals have been coming into the equity schemes, as also have some retail investors and corporates."

But all this has happened at least a month back. So while equity schemes have given phenomenal returns, the corpus is just melting.

Net outflows highest in 3 yrs

Even as foreign institutional investors are pumping in cash into the Indian markets, mutual funds have reported their highest net outflows in last three years at Rs 587 crore during November.

Mutual funds purchased shares worth Rs 3,356 crore and sold equities worth Rs 3,943 crore during the month.

The net outflow Rs 587 crore is the fourth largest ever. The largest was in February 2001, when Rs 1,181 crore went out. A month before that, Rs 925 crore exited, while in the October of the same year, Rs 679 crore flowed out.