Surge in MF AUMs? PSU banks do the due

While fund houses are patting themselves on the back, attributing the surge in AUMs to their expertise in handling money and fund track record, not many are convinced about it. According to mutual fund analysts, a lion’s share of investments has flown into fixed income funds last month; and a good portion of debt funds investment has not come from corporate accounts (the traditional fixedincome investor), but from public sector banks. According to market watchers, immediately after Lehman Brothers’ collapse, most banks had shifted their investments into highly-securitised CBLO market where they earned 3.5-4% interest on investments. Fund distributors maintain that with risk scenario improving over the past two months, banks are gradually diverting their investments back to fixed income products, where they stand to earn a return of around 7.5%. The surge in AUM is plainly because of the inflow of bank funds; there is clearly no increase in corporate or retail money, as claimed by fund managers.