After a 3-month pause, it’s raining mutual fund NFOs in July

According to industry data, as many as 18 AMCs launched a total of 28 mutual fund schemes in July

NEW DELHI: After a threemonth halt, new fund offerings (NFOs) have made a strong comeback with asset management companies launching over two dozen mutual fund schemes in July.

The new funds have been launched across the board — actively managed equity funds, debt, index funds and exchange-traded funds (ETFs). Interestingly, passively managed funds, particularly ETFs, continue to dominate the NFO market.

There was a lull in the NFO space as the Securities and Exchange Board of India (Sebi), in April, had barred fund houses from floating new schemes till the time the industry complied with its norms concerning the pooling of investors’ funds by intermediaries and distributors. The deadline for the implementation of the new guideline was July 1.

Also, the regulator had asked fund houses to implement guidelines like dual authentication for redemption, verification of source of accounts while mutual fund investments are made. These measures were aimed at safeguarding investors’ interest and to boost investor confidence in mutual fund investing.

According to industry data, as many as 18 asset management companies (AMCs) launched a total of 28 mutual fund schemes in July. Of the 28 NFOs, 24 are underway and the remaining four have been closed.

The NFOs, which are underway, include ICICI Prudential Nifty IT Index Fund, Aditya Birla Sun Life Nifty 200 Quality 30 ETF, Baroda BNP Paribas Flexi Cap Fund, Canara Robeco Banking and PSU Debt Fund.

Besides, DSP Nifty Midcap 150 Quality 50 Index Fund, HDFC Nifty 100 ETF, Motilal Oswal S&P BSE Quality Index Fund, IDFC Midcap Fund, Mirae Asset Balanced Advantage Fund, Quantum Nifty 50 ETF Fund of Fund, Union Gilt Fund and quant Large Cap Fund are underway.

In addition, half a dozen

NFOs, which included one by Franklin Templeton MF that is floating a new scheme after a hiatus of two-and-half years, have been lined up for the next month.

Amar Ranu, Head - investment products & Advisory at Anand Rathi Shares & Stock Brokers, said most of the NFOs launched recently applied for approval from the capital markets regulator long before the 3-month ban.

“There is now a huge rush amongst AMCs to fill their passive index funds or ETFs buckets and they don’t want to lose their passive share for the absence of funds,” he said.

In addition, the lack of alpha generation by actively managed funds over the benchmark has led to sophisticated or institutional investors shift some part of their portfolio to passively managed funds, he added.

Himanshu Srivastava, Associate Director Manager Research, Morningstar India, noticed an increased interest in ETFs from investors and fund houses alike.

Several ETFs have been launched over the last few years and quite a few of these NFOs are either sector-oriented or have a thematic bend.