Chillin' out till it needs to be funded
The greater reforms of the Financial Services in the country have had an adverse impact that has not recovered yet. According to Value Research Online:
Many of them have simply stopped selling funds and have switched to alternatives, perhaps to selling unit-linked insurance plans (ULIPs). Much has been said over the last six months about the impact of the abolition of entry loads since this decision was announced, but it does seem that SEBI’s decision may have led to a substantial setback to the mutual fund industry in India.
The Industry Wide AUM is seemingly down to INR 760000 Crores , still higher than any time in 2007 and more than 65% higher from Jan-2009. This Aum is as of 31 Jan 2010. According to Value Research online, Equity MFs have a downward trend since August when we launched our report service and SEBI cut out the middle men. The $190b industry is still >15% of Indian GDP ($1.1T) and thus about half of the country’s savings..Additionally some of this directly comes from the banking system, The INR 1T that does come from banks still not back into credit and in schemes that do not pay tax at the 33% IT rate despite being money market funds. Reliance MF is more than INR 115000 Crores, $28.7 billion, HDFC MF INR 95000 Crores or $23.7 billion and SBI MF, with the new campaign on TV, INR 36000 Crores or $9 billion Assets under Management
The dip in January is to be followed by another in February as banks get the money to work elsewhere