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Our Market Bureau
Mumbai, Apr 7: Releasing the Deepak Parekh committee report on US 64 restructuring, the Unit Trust of India was moving towards more transparency, said UTI chairman P S Subramanyam. The UTI chairman was addressing a seminar organised by the Indian Merchant Chambers' on mutual funds in Mumbai.
Subramanyam said that the mutual fund industry only reflected the performance of the economy and the performance of funds can only be improved if there is an improvement in the real sector. ``The mutual funds cannot add greater value unless the real sector improves, except in the case of certain sectoral funds,'' said Subramanyam. While the director of Aditya Birla Group Financial Services, S K Mitra said, ``The growing popularity of sectoral funds, especially in pharma and information technology (IT), was a cause for concern considering the level of absorption available in these sectors''.
Mitra said that the investor community needs to be cautious when portfolios of all mutual funds begin to look alike. ``Initialpublic offers (IPOs) of IT companies, the current flavour of the primary market, were also a serious cause for concern,'' he said. However, the recent success of the mutual fund industry proved that it was poised for spectacular growth in the next millennium, said Mitra.
Subramanyam said the industry has grown from Rs 9000 crore in 1995-96 to Rs 18,000 crore in 1997-98 and in the first three quarters of the fiscal 1998-99 (nine months) had already mobilised Rs 14,000 crore in terms of assets. The current size of the industry at $17 billion amounted to 10 per cent of all deposits in the banking sector, he added.
The vice-president (marketing) of Aditya Vikram Birla Financial Group, Sanjiv Roy, presented a table on the post-tax returns generated by stocks and said that if the nominal return on stocks was 21.99 per cent then the post-tax return was 16.02 per cent and the post-inflation return was 6.13 per cent. Compared to this, the company deposits, which give a nominal rate of return of 14.66 per cent,gave a post-tax return of 10.07 per cent and a post-inflation return of 1.22 per cent.
In contrast, bank deposits, which give a nominal rate of return of 9.29 per cent, give a post-tax return of 6.42 per cent and a post-inflation return of negative 2.16 per cent. While the perceived safest avenue of investment by the Indian public namely gold, gave a nominal return of 7.62 per cent, a post-tax return of 5.55 per cent and a post-inflation return of negative 3.63 per cent. Giving the statistics, Roy said that stocks were the best bet to beat inflation and earn good returns.
According to N K Sharma, vice-president business development at Birla Mutual Fund: ``Mutual funds met the wide variety of investments needs of individuals and were the best avenue for professionals like doctors, lawyers, engineers and others''.
Sharma said that management of money should be left to people who are good at it. He also said that mutual fund industry was the most regulated industry and investors should not run away fromthem. ``If risk is controlled returns will follow'', he said.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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This story was printed from Net Express located at http://www.expressindia.com. Net Express provides a portal to India, with news from The Indian Express and The Financial Express along with sites on travel and tourism, the entertainment industry, the power sector, the environment and much more.
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