Calcutta, Jan. 2: Collections from new fund offerings of mutual funds have fallen on a year-on-year basis in the first 11 months of 2007.

During the period, the 53 new equity schemes, including tax saving plans, mobilised Rs 29,214 crore compared with Rs 38,036 crore from 45 schemes in 2006.

It should be noted that there were no equity-related new fund offerings in August 2006.

Small investors preferred to put their money in existing mutual fund schemes having a track record of a past performance.

Net inflows into mutual funds in 2007 (till November) through equity, balanced and tax saving schemes were Rs 86,843 crore compared with Rs 38,216 crore during the whole of 2006.

The Securities and Exchange Board of India (Sebi) banned the amortisation (deduction in equal instalments) of issue expenses in open-ended schemes from April 2006.

Since then mutual funds shifted their focus to close-ended schemes, in which they could amortise initial issue expenses and offer new schemes without entry fees to investors.

Investors have also reduced the practice of getting in and out of schemes quickly.

This is why net inflows into equity, balanced and tax saving schemes of mutual funds — retail investors mostly invest in these plans — saw a more than 127 per cent jump during the period under review.

The monthly purchase and redemption data of these schemes shows net inflows every month in 2007.

However in 2006, there were net outflows in January (Rs 404 crore), June (Rs 1,255 crore), July (Rs 68 crore) and August (Rs 447 crore).

It appears that retail investors have learnt to stay put with short-term market upheavals.

Among all equity-linked schemes, tax saving plans (in which investment is locked for three years) witnessed the highest growth in assets under management.

While this growth was partly because of increase in stock prices, many taxpayers also turned to these schemes for the first time to save tax.

Growth in assets under management of diversified equity schemes at 45.82 per cent was lower than a 66 per cent increase in total assets under management of mutual funds.