Calcutta, April 19: Fixed maturity plans of mutual funds — where the bulk of the corpus is invested in debt — have caught the fancy of investors. Spooked by the volatility in the stock markets, more investors are opting for these funds.

Buoyed by a 75 per cent growth in income funds, the assets under management of the country’s 33 mutual funds stood at Rs 5,05,152 crore at the end of 2007-08 compared with Rs 3,50,467 crore at the beginning of the year. Mutual funds reported a net inflow of Rs 1,53,801 crore in the last financial year, up from Rs 94,080 crore in 2006-07.

According to data with the Association of Mutual Funds in India, the assets of income funds rose to Rs 2,20,762 crore from Rs 1,26,097 crore.

Their share went up to 44 per cent of all mutual fund assets from 35.98 per cent at the beginning of the year. Among the various types of income funds, fixed maturity plans were lapped up by retail as well as institutional investors.

Liquid and money market funds, in which mostly institutional investors park their money for short-term returns, showed a decline in assets after they peaked to Rs 1,15,956 crore in May last year.

These funds made up 28 per cent of the assets of mutual funds in May last year, which fell to 17.70 per cent in March this year.

In absolute terms, the assets under these schemes stood higher at Rs 89,402 crore from Rs 79,936 crore. Retail investors’ preference for debt over equity was more marked from the beginning of the current calendar year.

The assets of equity (growth) schemes rose to Rs 1,92,129 crore, or 35 per cent of the assets of the industry, by December from Rs 1,17,047 crore (33.40 per cent) in April 2007. With shares getting hammered from the end of January, the assets of equity schemes eroded Rs 35,357 crore to stand at Rs 1,56,772 crore at the end of March.

Interestingly, the assets of balanced funds, a combo of equity and debt instruments, jumped nearly 70 per cent to Rs 16,283 crore during the financial year. “Investors have been shifting towards debt-oriented schemes during the last three months as the uncertainties in equity markets continue,” said Saurav Sonthalia, chief executive officer of AIG Mutual Fund.

In keeping with rising interest rates last year, fixed maturity plans of mutual funds have given a handsome return of more than 10.50 per cent over the past 12 months.

“This was much higher than the interest rates of bank deposits of equivalent maturity. Besides, the high rates in money markets also subsided after March 2007, which brought down the returns from liquid and money market schemes of mutual funds. Institutional investors too found fixed maturity plans more lucrative,” said a fund manager of a private sector mutual fund.

Growth in equity-oriented schemes of mutual funds was rather subdued compared with the increase in market capitalisation of the National Stock Exchange and the Bombay Stock Exchange.

Market capitalisation, a measure of wealth created by equities, of the BSE rose more than 45 per cent, while that of the NSE increased over 50 per cent. The assets of equity schemes of mutual funds went up 33.94 per cent.