On the other hand, redemptions by mutual funds have remained steady. Redemptions and repurchases by mutual funds have, in fact, fallen to Rs 4,362 crore during April-June 1999 as against Rs 4,364 crore in the previous quarter. ``The first quarter has also witnessed the launch of innovative products like sector funds, gilt funds, income funds with periodic payment facility, umbrella funds and cheque writing facility for money market mutual funds. There is growing evidence ofinvestor interest in mutual funds and it augurs well for the industry,'' said A P Kurien, chairman, Association of Mutual Funds in India (AMFI).

The first quarter has witnessed a net inflow of Rs 4,400 crore. Fund managers feel this is a good development as the net inflow in the previous full year ended March 1999 was only Rs 345 crore. The total mobilisation in 1989-99 was Rs 21,377 crore and redemptions Rs 21,032 crore. ``More and more small investors are now opting for safer investment avenues like mutual funds. Moreover, the stock markets are also getting more institutionalised. Small investors have not much chance in the market with the entry of foreign institutional investors (FIIs) and other players with huge financial muscle,'' said an investment officer of a mutual fund.

Even as the mutual fund sector has started booming, the primary market has been languishing. Out of the total primary market mobilisation of Rs 1,445 crore during April-July 1999, almost 95 per cent (Rs 1,379 crore) was accountedby three debt issues from ICICI and one from IDBI. ``Mutual funds are giving steady and good returns now. Nearly 45 open-end funds have outperformed the S&P CNX Nifty Index of the National Stock Exchange last month. It's safer also,'' said a fund manager.

Fund managers also attribute the sops given in the last Union budget for the jump in collections. Finance Minister Yashwant Sinha has made returns from mutual funds totally tax-free in the hands of the investor. However, interest earned from bonds and bank deposits is still taxable. Moreover, the bullish stock market has also attracted small investors to mutual funds. Sensex had moved up by over 1,800 points to 4601 over the last one year.

Investors seem to have a special like for income funds. As much as Rs 4,574 crore - over 50 per cent of the total collection of Rs 8,762 crore - was accounted by income funds. Further, investors put Rs 1,722 crore in liquid funds and Rs 1,109 crore in growth funds.

Significantly, for the first time, 24 private sectormutual funds managed to overtake Unit Trust of India (UTI) in fund mobilisation. These private MFs mobilised Rs 4,273 crore during Aprial-June 1999 as against Rs 3,924 crore raised by the UTI. It may be recalled that private MFs had barely collected Rs 6,384 crore full last year (1998-99) as against UTI's Rs 13,364 crore. UTI, which faced problems under US-64 scheme, was of late concentrating on restructuring its portfolios.

According to AMFI, total funds managed by 34 mutual funds (including UTI) amounted to Rs 77,797 crore as on June 30, 1999. Out of this, UTI alone accounts for Rs 61,000 crore. If the current trend continues, mutual fund mobilisation will shoot up further in the remaining months of the current year.